Please be a little more specific about the direction of movement. If the big ends of the rods can be moved a little forward and aft, like toward the radiator and the flywheel, no problem. 1/16" is WAY too much, however. I'd be more comfortable with less than 1/32" forward/aft movement. Have you measured the actual movement, or are you making a SWAG? Try stacking up feeler gauge blades until you can take up the movement, add them up, and get back to us.
An engine would not run for over 5 minutes with 1/16" up and down clearance on even one connecting rod.
Jerry
