If an engine has leaky piston rings, it is likely to finish up having a black, oily intake port. There will be blow-by (gas leakage past the rings), which means a high volume of gas passing through the breather. When much gas goes through the breather the amount of oil mist and droplets it carries with it, becomes substantial. Additionally, engines with blow-by inevitably have dirty oil, so the oil passing through the breather is dirty too. The result is a dirty intake tract. Furthermore, the dirty oil carries dirt into the combustion chamber, causing wear to the bore and piston. Note that the wear to your piston occurred above the piston rings, not below them, indicating that it came through the intake pipe, not from the oil splashing from the sump. The wear is pretty bad on that engine: it may have had a leaky air cleaner as well as the dirt that came through the breather. Imperfect air filtering is a leading cause of bore wear.
It is better to do a more complete job of honing the scratches out of the bore: scratches provide a passage for blow-by, and perpetuate the problem. However it is not necessary to fully remove the scratches from the outside of the piston above the top ring. If you measure the piston diameter there, and compare it with the bore diameter, you'll find there is considerable clearance up there, even with a new bore and piston. That is not a sealing surface or a bearing area. Further down the piston it does have to be a close fit, to prevent piston slap.
The honing process is supposed to produce helical marks in the bore, not circumferential ones. You need to run the hone slowly and pump it up and down the bore as fast as you can. The bore should look like a whole lot of intersecting helixes, crossing each other at 30 to 45 degrees.
