ORIGINAL: downunder
That's not baked on castor, that's just varnish which is the last line of defence in a horribly lean run and it'll come off quite easily. But the piston...oh wow...do you fly off a beach or something? Some of those scores are very deep, is there still any plating left on the liner? Either way, you're up for a new piston/liner set unfortunately. If the liner hasn't peeled then I'd suggest you use a BruLine air filter (green filter) to try to stop that happening again.
We called the varnish, baked on castor. It's a result of castor and heat. And it's part of the defence line for sure, but it builds up to a point where it starts to cause heating problems. And must be removed.
The scoring does look pretty awful, but it really depends on the piston sleeve fit and since the parts cost about 70% of what a new engine costs, it'd be worth de-varnishing and running to get a bit more use out of that engine.
As for the liner peeling, that really seemed to be an era that is well past. How many years ago?
Another vote for the air filter!!! Those scores look like sand. Was the engine crashed recently? The scoring looks recent. The varnish builds up in scoring just like everywhere else. Matter of fact, the varnish buildup can lead to overly hot engine runs, that will setup a worse environment inside the engine that'll make scoring a bit easier. (the trash that normally passes through has more clearance to get caught and has varnish buildup to stick into)