So upon further inspection, it looks like the previous owner ran this motor with a disintegrated impeller. This caused a catastrophic overheating that must have caused the pistons to expand to the point where they scored the cylinders. Almost anything made of plastic or rubber connected to this motor is melted.
I have found a used powerhead for $760 on Ebay that still measures 125 in both cylinders.
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That, a new water pump and a few other new parts and this motor should be good as new for around $1200 total including the initial $100 I bought the motor for. To me this seems like a pretty good deal on a later model electric start motor. What do you guys think?