The only blocks from the factory that usuallycome with sleeves are aluminum

 

Just clean it up, I'm wondering about the connecting rod that came out of that hole. That's probably what made the damage..

 

I suspect that the cause of the damage is the result of a previous rod failure. I've seen my share of scattered engines and that type of damage is common. I agree that it will not affect performance and I also agree that you should touch it up with a grinder. Be careful not to get the grinder wheel against the bottom of the lifter holes. Good luck, Dean

 

the rod appeared to be okay, it probably was a rod though, in the 1st pic you can see a small spot in the opposite cylinder bore, it didnt really bother me

i guess the rod failed and they put a sleeve in it to fix the problem