This is a 22r with 150k miles. I removed the head and took these photos. I was in need of an economical used engine and I picked this up in a junked truck hoping it might be half decent. Upon pulling the head this is what I've found. Would I be insane to lap the valves and reinstall the head and run this as is?

 

Insane, yeah. You have the head off. That's 95 percent of the work.

Scrape the cylinders a bit with a ridge reamer, drop the pan and remove the pistons.

A little hone work and an inside mike will soon tell you whether a set of rings will suffice, or whether cylinder boring would be necessary to clean it up..

Rings and maybe rod/main bearings are cheap. I really doubt that you can get any good service out of it as/is

 

That looks like a fine rust film to me (but I don't know what's hiding underneath it). Start with a Scotch-Brite pad and some elbow grease. The rust/dirt/grease should come right out. If you see some clearly visible lines or scars (your #2 photo might have one), then you're looking at re-boring, and that might not be worth it. If they "look" okay, then you would be well advised to use a bore-mike to look for something bad, not visible to the eye.

Who knows, you might be able to see the cross-hatching once you get the rust out. If you can, you won't even need a ridge reamer.