Mine looked like that too. Dave re-did my head with stainless valves.(Upgrade from Ti) Stayed in spec all season. I hit the shaft with wet 800grit. When you replace the seal, push it in or leave it out a bit from its current position. The seal is about $4. The shaft is part of the cam at $150. What are you doing about piston/rings/cylinder?
98 uzj100. Factory rear-ARB front locked 4.88's. ARB Bull, Warn 9000, Irbis rear bumper, Slee sliders and belly pan. OME t-bars w/863 rears, HID, XM