Finally got the engine dropped yesterday. Today I disassembled the top end.
First, I think I'm going to need new heads/cams/etc due to this:

There's so much metal ground away that I can't remove the lifters from that cylinder [X(]
Next, the gunk in my cylinders!

And finally here's some shots of the bottom of the heads and the head gasket.

 

Definitely not a pretty sight! Looks like the engine was ran without oil or pretty damn close...[:@] The head itself along with the cylinders don't seem too bad, just need a bit of cleaning...a new gasket and it'll be good as new!
Good Luck!
RB

 

Thats nasty lookin...

 

omg[:'(]what did u do to her!! [:@]lol

 

WTF happened? Blown head-gasket?

That looks like the entire engine needs to be rebuilt. (kind of similar to what my car's engine looked like after I threw a few rods).

Is the head warped at all?

 

I don't know what happened to the engine, bought the bike as a project to work on and it needs a bit more work then I originally anticipated.
Haven't had a chance to check the head with a straight edge yet, but based on how the headgasket looked I think it is warped, or it wasn't torqued down right or something.
And yea, it looks like when it was running it was burning a decent amount of oil along with it, so I'm going to keep digging deeper and see what I come up with.