Undersized pistons?? I'd be concerned how the wrong pistons were put into the engine. I'm really not buying the undersized piston rational since it'd be knocking like crazy from the get-go, kinda like a chevy engine(haha). Have them mic the pistons(or check piston to cylinder wall clearance and compare to factory spec) and compare to factory spec or at least check for abnormal wear on the skirts. I still don't see how these piston wore down after 59K.
As for porting and polishing, unless this is strictly a race engine, no benefits will be noticed since the 4 valves per cylinder provide plenty of air/fuel and plently of area for exhaust to get out.
Every engine i tear down, no matter if it's a V8 or a weed wacker engine, i clean completely and usually paint for aesthetics and corrosion prevention. They also MUST remove any and all gasket residue, no if ands or buts. They also need to lightly hone the cylinders in order to get the new rings to seat. If they install new rings on the smooth cylinders, they'll never seat and you'll burn tons of oil and damage to the engine over-time. I'm certain they'll do it but ask to make sure. And don't forget it'll be a "new" engine so you'll need to break it in properly in order for it last a long time. See link for some suggestions on how to break-in an engine. Also make sure the crank is OK plus cams are not scored at all. The heads should be ok and no issues there. Deffinately smart putting in a new oil pump. They should also flush the oil lines just to make sure there's nothing in there to contaminate the new oil. You should use a 30w dino oil for break-in then you can switch to synthetic after 3K. Change oil and filter after 500 miles, although there's no casting/milling contaminates left, it's cheap insurance. Good luck.
Break In Secrets--How To Break In New Motorcycle and Car Engines For More Power