Time to post some measurements.
Liners: All three measured round at the top and slightly oval at the bottom, but still within the tolerances listed in the repair manual (100-100.12mm /3.9370"-3.9375").
Pistons:
All three were indentical, diameters as follows:
Above the top ring 3.918"
Above the oil ring 3.922"
Top of the skirt 3.930"
Bottom of skirt 3.934"
Top ring groove: 3.556"
Rings:
All rings were identical in thickness/width and had good fit in the piston grooves.
The only variations were in the end gaps (measured in the same bore):
Set number 1 with 41hrs. Comp .012", Oil .010"
Set number 2 with 1hr. Comp .009", Oil .009"
Set number 3 with 0hrs. Comp .012", Oil .012"
When number 3 comp ring was machined flat on the face, the end gap became .016"
The repair manual does not indicate minimum end gap, but does show maximums of comp .031", oil .039"
The comp ring section is .162" and this results in a ring OD of 3.880" (3.556+2x.162).
This leaves .0285" play between the base of the ring and the piston groove (3.9370-3.880=.057/2=.0285).
There is no way the ring could bind in the bore based on contact with the groove base. The oil ring also has plenty of clearance. An easy way to see this is to hold either ring to one side and notice how far it sits below the side of the piston.
I can't find any reason for bore scratching other than the interaction between the sharp edged top ring and the bore finish. At this point my plan is to procede with the cast iron liner and machine the number 2 set of piston rings. The number 2 set have the lowest end gap and I expect they will wind up at .013" after machining, well below the maximum liimit.
The combination of "plateau finished" cast iron liner and machined rings should work well. I am not rushing to place the order since the Canadian dollar has dropped greatly relative to the US dollar. Also, winter has just begun here, and I don't want to assemble the engine just to have it sit for 4 months.