[undy]

What bothers me is that the bubbles only showed up when the piston was at bottom dead center, not when it was at TDC. To me that would rule out a head gasket or head leak. It would point toward the lower half of that cylinder wall. The potential for cylinder wall distortion, given the "typical" thin cylinder wall history of rebuilt "OEM" 427s, is the greatest when the cylinder head is mounted and torqued to specs. That could be the reason it's not showing up under presurre and magnaflux testing with a "bare block".

That being said my recommendation is as follows..

If you didn't do it before I'd have that cylinder wall sonic tested for wall thickness. If it's too thin then I'd proceed to check the rest of the block to determine reusability. If it's OK then I'd have them bolt up a FE specific torque plate and torque to specs. At that time I'd have them do a die penetrant check, pressure test and magnaflux, in that order.

I can't remember if you talked about your block's history..but that would be my focus given the information you provided.

Dave