Brian, Yes the bore wear measuring .020 OS is typical is typical of a used engine and may be found with 25k mi of rough service or as much as 150k of good care and service.
The rings MUST be sized for the minimum dia cylinder they will RUN IN or they will not fit the cylinder well anywhere in their travel until well worn.I would use chrome rings of original bore size.
As previously stated the ridge should be removed to allow the piston removal without damage (top ring land) and to prevent the new rings being damaged by contact on every upstroke.
Normally bores wear more @ the extreme top of travel and do not wear round and different bores in the same engine will have slightly different amounts of wear--this is really noticible when boring cylinders as the boring cut is concentric with the unworn part of the cyl and some parts of the cyl are "cleaned up" before others.Many the front cyl will wear more than the back-I think because they see the cooler water from water pump and TOO cool running promotes cylinder wear.
With .020 measurable at the extreme you would need .040 overbore to totally clean up the wear.I find these early engines were considerably softer metal than later ones and some other brands.I was raised on stovebolts, have loved and massaged them for 50 years and rebored/repaired many, but I believe that GM screwed the user well by not using the best material as soon as it was available for engine block material.
Many engines with your measured wear are still giving good service.I would guess your main complaint is high oil consumption --please be informed that these early v8's are not normally as thrifty on oil as the inline 6 and I would never worry about mine if it used around 1 quart in 1000 mi--you may not see much better than that after a rebuild unless some other changes are made.
If much blowby is evident the ring replacement will be necessary but if only plug fouling is the complaint a easier cure may be in line.
These early engines flooded the top end w?oil and the valve seals were insufficient to prevent oil being drawn down into the inlet (high vacuum) and even the exhaust.The cure is like the later engines had after approx 1982.A good stem seal like the Perfect Circle VS2.But the heads before about 1964 must have a simple machining job to the upper guide to allow the seal installation(requires head removal and teardown).Later the factory machined the guides but wouldn't spend a few $ more for the seals so only if the dealer or mechanic had wanted to put them on after owner complaints was this a common cure.
A v8 chevy head repair must have these seals installed in my estimation to assure the best oil control.
Many shops knurled the guides internally to restore valve/guide fit but this not a good cure for oil control without the seals.
I have used the seals successfully without removing the heads if the guides are already machined.And the guide/valve fit is not critical for a head REPAIR, Not rebuild.
A good indicator of oil control by the rings can be found on the piston tops before cleanup--If the edges of the piston top appears washed clean and free from carbon it is from oil being wiped up from below and cooling the comb process but if a fairly uniform carbon coating exists the rings are still doing a good job.
These engines are so tough they don't have to be perfect to do a good job but there is a satisfaction that comes from putting one back like near new--it's just that there are so many places to put the money if we listen to every voice.
Have fun.
