So, at this point I am convinced that the blow-by and the knock are both related to the cylinder scoring in #8. Yeah, I should have dealt with it when the engine was on the stand (three year ago...), but we were getting ready to move and I just needed to dump the engine in and get the vehicle shipped.
The engine (supposedly) only had 17K miles on it when I acquired it. From the looks of the bearings and cylinder walls (except #8), I'd say that was pretty accurate.
Place I bought the engine from said that it is too long after I bought it and they are not willing to do anything to help out.
The plan - pull it, strip it, get it bored, throw in new pistons and rings, and put it all back together using existing bearings, etc... I need to get it done as inexpensively and quickly as possible. This will only cost me the pistons/rings/gaskets/machine work. I figure one weekend to pull and strip, drop at the machine shop Monday, get it back a few days later, assemble, dress, and install the following weekend. I would probably splurge and go with 18:1 pistons over the stockers.