Rusted and pitted walls are not good.
Some of the original 130s had cracks in the water passage. It normally caused a problem with #3 cylinder with water in cylinder.
There were also problems in the head with some of the ones that had the powerhead replaced.
Does it run ok after it starts? If so, the injectors are probably ok. If it justs fires with starting fluid, then you probably have an issue from your vapor separator to and possibly including your injectors.
The compression has me concerned. It should be around 199 or so. Do you have the throttle advanced all the way while you take compression?
Have you checked the valve clearances? How about a leakdown test?
I do not know of oversized rings offered by Honda. There might be something on the internet.
Working in a small shop in the Midwest, once we determine that the block has a problem, we would install a new short block if the customer can justify the cost. Fortunately, I have not had that situation yet. That said....the costs of the block and the labor may make the customer consider buying another motor. To change the block, everything on the lower side of the motor has to be removed before the powerhead is removed. Then you also have to make sure that all the old electrical parts are still good as well as the fuel delivery system.
I hope you got this for a really good price. I have not had much experience with the Navy, but the Coast Guard guys I deal with, run their engines for 1000's of hours, but they do regular routine maintenance. This one may not have been so lucky.
I wish I had more definite answers for you...maybe some of the guys near the ocean have more experience with high hour 130's and maybe have a source for what you need.
Mike