The "punch and hammer " marks would be detonation.

You win.

I would not go chasing the cause of this problem, with thermostat issues.

You had spark plugs with the gaps closed up, hammering marks on the pistons, and a valve seat failure.

Just because it appeared to be running "rich" doesnt mean squat. Fuel mixture is only part of the battle against preignition/detonation. I'd be looking at the fact you have a boosted engine, that had possibly too hot of a spark plug, with a projected tip. The projected tip plug will light the fire sooner than a non projected tip. If you had the timing advance too aggressive, the projected tip was probably making the situation worse, as was the hot heat range plug with boost. Running "rich" isn't gonna help a poor setup that's asking for detonation.

And a blow thru carb in a boat. Be careful !

Edit in: check, recheck, and again recheck you are not leaking any cold water thru the exhaust.

Guess I need a better description, it's not little pits and marks all over, it's big chunks stamped in random shapes all over the portion of the head where the piston almost meets, along with debris lodged in the pistons and head as well. The marks are up to 1/8" deep or better and up to almost a 1/4" in diameter.

I'm with Mild on this one. The only thing running rich will do is help show that the motor is detonating. It's not the first light that's get you it's the continual light that does. If it was me. I would start with a number 11 NGK plug gapped @ a very tight .023 and go from there if you gap your plugs correctly you can tell if the motor is detonating if the gap opens. It will only open .001-.002 the more you open the gap on the plug the more heat you give it and a better chance to keep the mixture burning.

I`m pretty sure here that your headers may be too big .

Maybe this will help explain it....


http://youtu.be/43Lg5dA3nLY

Improper exhaust dimensions can / will add more reversion (intake + exhaust) tendencies esecially when at 'worst length'.
When the energy wave comes back to the valve and it's open...slurp.

Serious.

i think the op said he has cast heads.i have seen the merc iron heads drop exhaust seats before.some of them had improper sizing when they got machined for the seat and when they got hot the seat came out.iron heads on a procharged engine is asking for trouble imo.