Cool looking project, would not sweat the little bit of water in the cylinders after all you said the surface rust wiped up!
Would finish the tear down looking for any obvious signs of damage then take it down to the machine shop and have everything checked to see if you can get away with a honing or if you need to bore it. Since you have it stripped this far would go to your local Pick-N-Pull and get yourself a set of GT-40 heads for about $80-100 for the set and build those. There are several aftermarket intakes that are available that are pretty inexpensive, which would be a good resale point as well as the improvements they would give. DB Electrical was a inexpensive source for me when I bought a starter that is now going on its third season. They also sell alternators!
For your distributor it could probably be dissasembled and hit with a blast in a blasting cabinet and then reassembled with new bearigs or bushings.
As for the exterior corrosion under the engine cover; keep in mind that if it has been sitting as long as you say it has there has been plenty of condensation taking place in there leading to some ideal conditions for the surface corrosion you have observed.
During your teardown process take a look at the wiring as well to see how far back the corrosion might go in the wiring jacket.
Where abouts are you located in Florida, I have some extra gages; PM me if interested.
Hopefully you bought the boat for a couple grand or less leaving you lots of expense money to stay in the green with when you go for resale.