I would not give up on that head if, as you say it's not cracked. They usually crack between the exhaust port and the intake port up the side of the combustion chamber. I have an 848 head that's been milled a moderate amount to make sure it's flat and the quench area around the intake valve is noticeably diminished. The head is on a 261 which should give 9.2:1 + a little from milling. It runs fine on regular gas. I have a hotter than stock cam and checked the intake valve clearance to be 0.050 at minimum. I don't think your blueing is caused by high compression ratio. Probably lean mixture is the culprit. Cut the valve seats back enough to protect the intake valve and set the seat contact at the outer edge. That helps keep the edges cool. Also make sure the intake valves aren't too thin at the edges. I have cut the edges back a little to eliminate thin edges on motorcycle racing engines with no shrouding and had them survive a whole season's racing.
Measure your valve clearance with one cylinder assembled on a used head gasket. If you get 0.050 I'd say you're good to go.
You may well be correct about not giving up on the head, but it needs new valve guides and new valves, and who knows what all that heat did to the head. I have a couple three extra heads to choose from to put back on this engine. I would rather go that route since my out of pocket expense will be the same whether I have the current head redone or one of three others I have to choose from.
