Adding to what andrew said about the coolant passageways:
Heres a picture of TDC with a straight edge showing the gap...
I'd recommend buying a feeler gauge set. They are cheap, super accurate for measuring gaps, and very useful for wide variety of things you may be interested in doing inside your engine. You can also use them to check valve clearances for solid lifter motors.
Slip feeler gauges underneath that straight edge you've got laid over your piston tops to see what the thickest one is that will "go" and that is your piston projection. Scrape everything clean with a razor blade first if you want accurate results, and also I recommend "rocking" the piston one side, measuring, and then to the opposite side, re-measuring, and taking an average for the true piston projection reading.
What is the caked on crud in the tops of the cylinders?
You mean the caked on carbon around the the tops of the cylinder bores? That is pretty normal. It's because the top piston ring only travels up the bore so far, and any area above it can't be "wiped clean" like the area below.
For many tips and info, search the archives here by keywords. Feel free to ask about any specifics that aren't previously covered. Good luck!