Russ, the rings are butting for sure. Here is a pic of the top and second ring. You can clearly see the shiny spots on the ends where they were rubbing. And at .034 gap. I should be able to spray with a 300 shot and be ok. They butted with Diamond and CP pistons. The engine didn't smoke but it is evident that oil was getting into the chamber which is what I would expect to see if the rings were butting.
Ray, the cylinder walls will wear before the rings as they are much harder. As for the locked timing, the only time the engine is at low rpm is when I'm driving around the pits in first or second with out any load on it. I doubt that 33 degrees would cause a problem under that scenario. HOWEVER, when one runs into an odd problem, sometimes the solution is equally odd!