Hard to say from a picture on the internet, but it appears that the cylinders may have a little rust pocking in a couple places. If there is considerable depth of oxidation to those rusted spots, you should at least consider buying a set of larger diameter pistons and having the cylinders bored/honed to match them. However, from my seat several states away, it doesn't appear to be much more than a superficial cancer that could be simply honed out by a light glaze breaking with a drill attachment hone and a very steady hand connected to a focused and intelligent brain.
It really depends more on what you want from the car and your budget. I'll focus on the shortblock since that seems to be your concern. If this is going to be a budget shit-beater, very lightly hone it, check the ring gaps, check the decks, check the bearings, only replace what's out-of-spec and slap it together with mostly new gaskets and seals, knowing that it may not run well for long if something's a little off. If its a performance build, or going in a car you really care about and don't want to pull the engine from again anytime soon, I'd recommend having the block professionally checked and hot tanked by a machine shop. Then have them bore to match a set of oversize pistons you supply to them and get the new rotating assembly balanced.
