yeah the cylinders and pistons are trashed.
Remove the pan, remove all the rod caps, remove main caps, remove timing set, remove crankshaft, then lubricate the cylinders with ATF or whatever you have, then you're going to have to beat them out manually. I like to use a wooden dowel to beat against the bottom of the pistons, but get several because they will mushroom quickly. With wood you stand less chance of beating up a rod or cylinder badly enough to render it useless. With what I see in the picture, the cylinder wall may not be salvageable anyway. Measure it's bore in a clean cylinder. If larger than 4.000, it's junk. I've been down this road many times and almost all of the time the block is not salvageable because even though the rust is "surface", when boring the cylinders to 4.030, you are only removing .015" from each side and a lot of times there is still water shadows in the soft iron. It may have to go .060". If it's already 4.020 or larger, stop what you are doing, pull the parts that are salvageable, and scrap the block/pistons as they are junk.