Found this on the Internet:
The fine folks at Power-Pak Rebuild (may they rot) did not finish the crankshaft properly-- the surface of the metal where the rods attach has to be perfectly round and mirror-smooth. This level of finish wasn't achieved, and the rough irregular surface wore grooves into the bearing. I'm guessing they "boiled out" a used crankshaft-- that is, immersed it in a bath of phosphoric acid solution to remove goop-- and slapped it into the motor, not bothering to re-polish the bearing faces, roughened by the acid bath. The damage is bad enough to eventually cause a failure-- next month, next year, or even later, but a matter of time nonetheless.
The same incompetent boob who did this is the probably the same person who installed the rings in #3 so the gaps were right on top of each other, causing the bad compression.
The short version: the engine work is going from an intermediate repair and partial rebuild to a major, engine-out, complete rebuild.
Found this tag riveted to the block. It clearly names the culprits - Power-Pak