It isn't a problem to have water drain into the cylinders... IF you dry it out and coat the cylinder walls with oil to keep them from rusting. It is a good idea to put oiled rads in there too if you are going to have it apart for a while, and you MUST change the oil before running it again! You don't want water in your bearings!
Having said that, look at the head gaskets very carefully. Hopefully you were able to get them off without tearing them. Look for a place where the gasket is disturbed. If you find a place in the gasket that looks blown, look at the same place on the head to see if there is a crack... most likely, the crack will be in the same place the gasket blew.
You will have to go over it with a magnifying glass to look for cracks. Most of the time heads crack between the valves. Still, you should send them out to a machine shop to make sure they are okay, and to have any work done that they may need. It is possible to have problems in the head in places where you cannot see. I doubt that we will be able to detect problems from photos taken, but we do like pics, so do show them to us!
This may be late advice, but if you marked the distributor before you took it out, make sure not to turn the engine over until it is back in or it will be WAYYY out of time and will not run... I know, it's tempting to turn the key to see the pistons go up and down, but resist the urge. LOL! Speaking of pistons, do they look good? are they all chewed up? what about the cylinder walls... You should be able to feel a slight "ridge" at the top. This will give you an indicator of how worn the engine is. What about the cylinder walls? are they shiny and smooth? Can you see the original honing marks in them?
Pay some attention to the lifter valley where the oil drains back down into the block... Are all of the oil journals clear and letting oil drain properly, or are some of them plugged up? What about sludge? Is the inside of the lifter valley all crudded over? It won't hurt anything to clean all of that out and make sure the passages are not obstructed.
Do you have gack all over the block from years of leaky valve covers? This would be a great time to clean it up while you have fairly good access to it. I scraped as much off with a plastic putty knife as I could, then hit it with a can of "easy Off" oven cleaner... I figured that the engine looked a lot like some of the stuff my wife makes in the kitchen and Easy off always seems to work for her so... Ans it did. The block is clean! Just know that it will take paint off, so if that isn't what you want, then use something else!
I used the opportunity to clean the block and strip and re-paint the valve covers and other engine parts. I am still butt deep in this thing, but I will share some images with you for reference...
Here I am working on the grease pit... It might as well be a barbecue grill for all the nasty crud in it...
Here is a shot of me with the project supervisor...
Nothing says "love" quite like the kids helping out:
Notice the yummy crud growing on the motor mount and oil filter... Mmm mmm MMM!
I have started working on the engine cosmetics while I am waiting for my new heads to arrive...
My wife is SO patient... not complaining because I used "her" oven to bake and cure the paint... Ya gotta do what ya gotta do!
Keep us posted on your progress and don't be afraid to ask for help!