Pull the cylinder off and check the rod play. Your rebuild may include the bottom as well as the top. Cylinder may just need to be honed. Wiseco or Vertex will work fine.
Shite!. I have never seen anything like that. Is that metal stiff or flaky? Either way I'de strip the top end to see where that came from. Almost looks like Nikasil coating from the cylinder. Seriosly, check it out, you shouldn't have any metal 1/10tht that size clogging up the screen.