Well, it seems that “rebuilt” means “painted” to your PO. The paint does indeed look nice. Now that you know that, I suggest two options:
OPTION 1:
File surfaces smooth as recommended above, slap on a gasket, and go. Maybe fit a new water pump, but not one of the expensive ones. Someone will be back in here in the not-too-distant future, so a cassette won’t offer much value-add. Based on the sprocket wear, you might also consider a timing chain if it fits the wallet. An expensive item to have fail. 
OPTION 2:
Rebuild while it’s open, because an 81,000 mile TwinCam can’t have too much further to go. This is going to be expensive because of the head work, but may be cheaper over the long haul if you want to get more than 10,000 miles out of it or want to experience the car the way it was intended to run.
If you choose option 1, you should be very attentive to signs of impending bottom end failure (Oil pressure, bad smoke, etc.) that will make your ultimate rebuild cost much larger. When they arise, bite the bullet before it breaks.
The good news I see here is that you have a fairly gently worn original engine. It may be close to worn out, but there’s nothing obviously awful in your pictures. That’s actually much better than having a botched rebuild to work with.
As far as the gasket is concerned, weren’t restricted flow gaskets a revision to correct a flow problem to the other side of the engine? There’s a thread either here or on the Europa site that speaks to this, and if my recollection is right, the gaskets that appear to be bad (like yours) are actually the good ones.
Doug Nicholls, 54/1822 Ma~