Those motors are KNOWN for oil consumption. Toyota says 1 quart per 1000 miles is "within spec". There is an updated ring pack set available (Toyota or Hastings) that will reduce consumption. Unless you're rebuilding the motor (you might want to consider it) then you're going to have to live with it. It is quite possible from the looks of the head/cams there that you may have a secondary issue of sticking/gummed-up ring lands..... once you get it running right, try using some upper-cylinder additives, even Seafoam, to get them unstuck.
Here is Toyota's shop manual on the whole process on the 1ZZ-FE (2003 Matrix, but yours is very similar):
http://madstyle1972.com/Repair/14/201lbc04/a040001.pdf