Pulled head: Should I focus on head or shortblock?

[Xenocide]

I've been having knock issues for a year or more now and it was to the point where everytime I get boost I get knock. Leakdown was 90 94 90 94 and air was leaking past the rings (out oil cap) and intake vales (air rushing through intake.) I pulled the head last night and this is what I found. I was hoping to get by with just having the head rebuilt (cleaned up - valve job/seals etc.) but do you think I should just go for the shortblock? The engine is a JDM (who knows mileage) plus another 60k I put on it.

Here is the #1 piston (they all look about the same as this) Is the amount of carbon build-up enough to cause the knock I'm seeing (knock would immediately go to double digits as soon as I give it over about 5 to 7 pounds of boost)

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Here is the best picture I had to give you an idea of what the valves looked like:

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Here is the cylinder wall - what is up with #3?

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Suggestions?

 

[Lunch_Box]

Do it right the first time and get both done. That's my suggestion.