Difficult to see into that 'black hole' of the cylinder, but you might use a "green" ScotchBrite pad with hot, soapy water to scrub the cylinder wall. No worries about damaging the bore; the Nikasil plating is all but bulletproof.
After a rinse and drying, you should easily see the OEM cross-hatch pattern, If there are no areas where the Nikasil plating might be damaged, odds are in your favor that the jug is good to go back into service.
That piston is definitely toast. New piston and iron rings for sure. That poor cylinder head. I would not trust just any engineer or shop as to the possible repairs. There is a forum member here that discovered that the hard way when her
repaired cylinder head / valve seat came back as totally unusable. Save yourself some time and possible frustration trying to remove valves. You already know they are damaged. Get an estimate from a legitimate BMW shop even if you have to pay for their examination and opinion. You'll be money ahead.
Good, gently used cylinder heads show up frequently on eBay. Years ago, I bought a pair of assembled R65 heads for $60.00USD and put them away as an investment in the future. Installed eight years later, they are now running well on my 1981 R65.
Shop wisely, Grasshopper.

Post up what you discover.