Harold, a retired diesel mechanic who has generously donated his shop and knowledge, and I ripped into the motor today. What we found was both better and worse than anticipated.
The Good: All the major internals seem to be in fine condition. The issues seem to be limited to the piston.
We initially thought cylinder 2 had a stuck ring. We pulled that piston out first and sure enough, stuck rings. Stuck pretty good too. Barely a gap in the rings and no movement from them whatsoever. Then we popped out the cylinder 3 piston, whoops stuck rings on this one too! Worse than the first! The rings were stuck in so bad they had to be pried out. There was significant carbon build up in the grooves the rings fit into. Harold showed me a neat trick to use and end of the ring to scoop out the carbon. Made quick work of that.
That was not the extent of the issues though. The bearings and rods looked great. No discoloration on the piston or cylinder sleeve that would indicate overheating or worse. No grooving. However after we cleaned off the piston heads Harold was examining one and found a nasty crack that runs nearly through it, another had a crack forming. I am going to be replacing all three pistons and their rings just to be on the safe side. Because everything else looks so good I will have full confidence in this motor when we get it back into the boat.
While the motor is out I want to get the rust cleaned up and put new engine paint on for protection. That is the next actionable step.