David,

The part that gets annealed is not the cylinder sleeve.
It is made of heat treated, hardened steel in such engines. This is why it was not even scratched by your Dremel tool.

The cast iron piston, or ring, is soft to begin with, but after getting annealed it becomes hard. While the break in progresses, the cast iron part embeds some of the hard steel particles that come of the sleeve and uses them to hone and lap the sleeve.

Please read this web page: http://www3.telus.net/dieselcombat/breakin.htm .
It talks about Diesels, but the principle is identical.

Ed_Moorman,

Some of these older "geezers", that grew on ringed engine (and some younger "geezers" who learned from them), misguide new modelers to break-in their new ABC/ABN engines, as they would a ringed engine. This causes the tapered bore engine damage and prevents it from ever making its intended power output.

And it is all done with good, honest intentions.

This is why I started the "Break-in in tapered bore engines" thread about 7 months ago.