I would do a piston change at the least. The previous owner probably re-ringed it, which is why it makes good compression, but never replaced the piston. That scuffing on the cylinder may be superficial. If there isn't any gouging, you may be ok to reinstall a new piston and run the bike until it burns that one out. If the bike makes good compression and has acceptable blow-by, there shouldn't be too much of a problem. Your cylinder looks almost new otherwise, that's a lot of cross-hatching for a worn out cylinder.