That looks like lean condition heat damage to me. Piston is a gonner. The cylinder may be salvageable (believe it, or not). That little dimple at the top of the exhaust port would need some special attention but the rest just looks like extreme aluminum transfer from the hot piston. It can usually be removed by various methods leaving a relatively clean cylinder in most cases. There may still be some grooves or scratches, but you need to get to that point before determining whether or not a new cylinder is actually necessary. Scratches can be smoothed out and grooves may or may not be a problem depending on how deep/wide they are and where they're located relative to the travel of the rings. Anything below the rings is not usually a problem and anything above would need to be assessed for how much compression may be lost.
