Time for an update:
It is starting to look like the engine either recently had a complete overhaul or had very few miles on it. The valve guides were well within spec, they look and measured like they were new. Can't recall the actual reading I got but it was well under the 1.3mm allowed. Because of this I decided against porting, I didn't want to cause any damage to the guides. I'm sure I could have done something without damage but since I'm just looking to run it in stock form and not go for all out performance, it will be alright.
I got a new exhaust valve to replace the bent one; along with all new lifters. Now cylinder 1 looks like it should. Lifters sitting level again.
Cleaned up the intake valves. They came out nicely.
The head is now all put back together and patiently waiting to be reunited with the block. Which brings me to the next part of the rebuild. As seen up above in this thread, the key on my timing gear gave way so the crank needed to come out.
Started tearing down the block
All the surfaces look fine, no scratches or marring on anything
Pistons all look to be in good shape and will be receiving new rings and bearings
With everything removed I was gave the block a nice coat of paint
Highlighted just incase I forget what I've got in there (even though it won't be seen on the back)
Parts are starting to pile up all over the garage
Also got my gauges in. I went with VDO in a Scirroco 1 center console. This matches really well with the interior of the Rabbit.
I've read mixed reviews about them but I'm hoping for the best. I've got a EGR probe from Aircraft Spruce waiting to be installed in the exhaust manifold.
Now I'm working on cleaning the mating surfaces for the head and block. It is taking forever but being sure to get everything clean and smooth for the best seal. Like I said I've been to a few shops to see about getting my crank nose done to accept the D shaped TDi timing gear but no luck yet. I'll see if I can get something like the ones linked above. I don't really want to drill and have studs put it. I feel like that would just as much work as having the nose made to accept the TDI gear; having to use a drill press to ensure everything to straight and true.
I've already got most of the parts I need to put the block back together so hopefully the end is near. My A4 is taking a major crap on me right now and needs the garage space so the Rabbit needs to be finished ASAP. Only hard piece left for me to find is a turbo diesel fuel filter mount, the one that goes on the firewall. No luck so far but figures crossed.