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The leakdown you saw past the rings (i.e. to the case) is actually pretty good evidence the backstory on the engine is true, since if it's really never run, the rings haven't seated and you'd get significant leakage there. I would roll it over a few times and take a look with a boreoscope. If you see brand new pistons and cylinders, it means the engine was rebuilt and you might want to roll the dice if it's a good price.
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