Here is a summary of the event that I wrote shortly afterwards. I haven't updated it since then, and it doesn't have many details on the actual problem, as we didn't know what caused it when I wrote this:
http://www.wotelectronics.com/engineout/
The engine was taken apart, but I never got to speak with the mechanic directly or see the engine for myself. I was told that one of the valve keepers came loose, which would explain what happened, but doesn't explain why that keeper came loose. I don't see how that would have been related to any spalling issues, unless the spalling was bad enough to allow some slack in the valvetrain. I suspect that other parts of the engine would have failed due to the metal circulating in the oil before there would be that much slack in the valvetrain though. I don't know how much metal was found in the oil screen, which would tell us a lot.
I have theorized that it could have been a pulled or loose rocker stud, allowing the pushrod to come loose, or some similar issue with the valvetrain. I really should have gone to look at the engine myself, but all I ever got was secondhand information. What I do know is that the engine completely destroyed itself in a matter of a few seconds. Valve & piston pieces from one cylinder fell into the intake spider, and were then sucked into the remaining three cylinders, which destroyed all of them. It was so bad the throttle even jammed in place just seconds after the failure (piston & valve pieces fell into the carburetor).