It's very highly unlikely it's actually a "red block". They were unique only to the 1982 M/Y, and just as unlikely a "used military engine" is a 36 year old original. Anything is possible, but I'd be surprised to find a "military" engine with the original red paint from covers to pan.

As far as using it for a 6.5L build, simply no. It's a 6.2L engine. You can bolt on all the 6.5L stuff, but you'll end with no more than what you start, with the same limitations of any 6.2L short block. The piston crowns aren't anodized/coated, so combustion temps are limited to that of the N/A 6.2L.

That aside, if it's otherwise healthy, there's no reason it wouldn't be a good block for a 6.2L build.