Thats one of the worst bits of news you can probably hear, but yeah that is bad bearings. If the motor has to come out, there is no time like then to do it up right. Trying to save 100 bucks can cost you thousands later on. Find someone who has the right jig for square decking a block. Most race engine builders will have that. I would go with a square/zero deck so you can get the proper quench and reduce detonation. Detonation is extremely hard on rod and main bearings as we all know. Most important of all, line hone it. If it looks like it has been lined honed before, try and find yourself some virgin main caps, so that you dont keep creeping the position of the crank higher up, which will retard cam timing and put more slop in your timing chain than you want. You also will end up with a portion of the thrust bearing support in the block and cap not being round, because a line hone cannot cut the part of it where the thrust bearing flanges out and nests deeper in the block. If you go with a main girdle (highly recommend), make sure they have it so it can be bolted on when it gets line honed. I would also go with ARP main studs at the same time. If you decide to change any of these things down the road, the line hone will distort differently than it was before. So heres what i would do:
Buy some ARP main studs.
Buy a main girdle.
Get some virgin caps if the motor has been line honed before.
Double roller timing chain and eliminate the chain tensioner all together.
New oil pump, but I wouldnt go with a high volume pump because unless you've modified the block to allow rapid draining of oil to the pan, all your oil will end up in the top of the motor cause it cant drain quick enough.
JE pistons.
Good rods with ARP hardware. Does Eagle make rods for these engines?
If you have the money, go with a roller cam.
Eliminate that God awful rope seal on the rear main.
If you end up getting your heads done, go with a proven performer. I saw a set yesterday that a friend brought by, and I couldnt believe the hackery. The valve heights were all over the place cause the seats were unevenly cut. The intake valve in 1 combustion chamber was unshrouded 1/16" more than the others, and they were actually all over the place. Port volumes were totally uneven and the port job was terrible. The chamber volumes probably varied by 5cc's from chamber to chamber. The heads had been angle milled so nothing lined up on the intake. The intake they sold him had a bunch of glass beads embedded into some leftover sludge...that motor would have been gone in no time. The hackery went on and on. The person who ported these heads actually has somewhat of a reputation for doing TR heads. Dont know how that happened. I would go with champion. Nothing like CNC porting for consistency. Heads can be done anytime. But for the bottom end, I would never go with any less than what i mentioned above. Building the right platform from the get go is the only way to go.
Oh yeah...hopefully the engine builder will have a torque plate for the finish hone. Its amazing just how far out the cyliders swell in the areas where the head bolts screw in. My hone would literally bounce and jerk in the bore every time the stone would pass over each of these swells. If you saw just how big these swells were, you would wonder how in the world a set of rings can last at all...I even wonder how they do. Use new head bolts too, cause you dont want to take the risk of using a set of bolts where some of them in the batch may have yielded. Its things like that which can cause head gaskets to go. A yielded bolt will not hold its torque. Make sure that when a straight edge is layed across the tops of all the valves, that they are all at the same height. You dont want to have varying preloads on all the lifters.