RE: Is there any hope for this engine?
Flybeetle, it looks like you might have also been running the engine too rich...
Remember to get a new gasket set for the engine, and possibly an O-ring for the carb-to-engine seal, if it's not included. When you reassemble the engine, you can lube the parts with after-run oil to help them fit back together better.
Also, if you've gurned the heads on any screws, another screw set would be a cheap addition to the parts.
Hope that this helps,
Bob