I vote new engine as well. The old one might be more of a hassle than its worth
if you're rebuilding it one block is as good as any other, as long as it passes some pretty basic standards.
The crank and cam journals must be true.
There can't be any cracks in it.
Other than that you're going to be replacing/machining everything else in a proper rebuild, so it doesn't matter.
I see no reason to toss the block away because of a burnt piston. I would try and diagnose what happened to the piston first. Is there splatter? A clean hole or burnt hole? What does the connecting rod bearing look like for that cylinder? Plastiguage the mains bearings and see the tolerances. Look in the pan for other chunks of metal.
The motor might be fine, the bottom end might not need rebuilt. It's entirely possible that piston was damaged by a foreign object, or a broken spark plug. Might be a good candidate to drop a new piston in that cylinder and run it. The 4.0 is a glorified tractor motor, you're not turning a small block at 8 grand here, it doesn't need to be balanced and blueprinted. It may be entirely possible to hone the affected cylinder a touch, drop a new piston with some new rings in it, re-ring the other pistons and run it for another 100K miles.
Really what the OP needs to do is find a good old boy that's local to him, have a sixer of his favorite brew in the garage and have someone come look at it. A good visual inspection of the block will answer all of these questions.