Block flaw?

I'm tearing down a 1275 block and came across
something that really looks bad to me. But, I'm pretty
damn amateur as it turns out...When I removed the
timing gear and chain I found a hole that passes
completely through the block, from the smooth machined
side behind the chain to the inside. It is not
uniform. Feeling from the inside it does not appear to
be caused from wear. I've taken a picture available at
http://server5.pictiger.com/img/95729/cars-and-motors/block.jpg.

Is this normal and functional, or do I have a flawed
or damaged block?

Thanks,
Joe Lansing
62 Sprite.
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