Looks like a broken ring, valve guide or plug end. Are the rings still complete on No5? check the guide and see if they still protrude fully from the head. (ive had 3 rb26 heads come through with broken guides requiring rebuilds)
Head will be fine with a weld and shave, piston can be reused with bit of creative work, all cheap. If your after huge hp then swap it out but for general duties i would not stress.