Wow. I'm sorry to hear about this.
I had the lower radiator hose blow off my 1600 while driving on the
freeway years ago. I heard the pinging too and looked at the temp
gage. Oh oh. I was lucky, though, I pulled off the freeway and right
into a gas station. I added water slowly to the radiator while idling
the motor (after putting the hose back on!!) and no damage. The cast
iron heads aren't as prone to warping as the aluminum ones are, and I
noticed the problem before it had had a chance to burn the oil. I'm
planning to put an overtemp warning device in my present car for just
this sort of occasion.
I don't know what the implications of the burned oil are, but from your
description of the state of the motor in general, I think I'd plan to
rebuild it. You may get off with just replacing bearings and rings, and
honing the cylinders. That's all I've done to the three U20s I've
rebuilt, because everything was in spec otherwise. It's a lot cheaper
and easier to rebuild a motor before you have to bore the cylinders, buy
new pistons, get the crank turned, etc etc etc.
This will be an interesting and rewarding experience, so try to keep
smiling and look on the bright side. Good luck with it!