I cannot conceive what internal part of the engine got struck by this piston skirt? It appears this damage might have been caused by someone hammering upward on the piston skirt with a long drift punch or bar in an attempt to drive up and out a stuck piston?? In any case I concure, a 60 over engine is pretty much done her job and needs to retire. If you elect to rebuild and reinstall a replacement 216 rather than opt for the easy / sleazy 235 swap out, I recommend replacing the original babbet connecting rods with the upgraded bearing insert rods. This will increase the integrity of the engine and make further overhauls (if needed) a breeze. No shimming required!!