I've decided not to replace the pistons..
I talked to a guy who used to work at Subaru and now does rebuilds for most independent garages in the area and knows his stuff - he told me to get a new short block, so that's what I did. $2000 for a brand new short block isn't too bad. He said I might get away with just pistons and rings if the bore wasn't damaged, but he always does a clean up hone when he does pistons.
I brought the heads to the machine shop and the guy told me that there was signs of detonation and by inspecting the pits on the valve, correctly identified the cylinder that had the piston failure (although I wonder if the distress wasn't the piece of piston banging around). He told me that even though it calls for 87, use 91 octane in the 2.5L Subaru to prevent this type of ringland failure. He also said valve guides are known to walk out so he machines in a retaining clip.
This engine does feature a knock sensor, and I'm going to change it. I don't know if the car had a discernible spark knock or not (I'll question my DIL more thoroughly), but I'll make sure she uses high octane gasoline. In any case, there were no lean codes in the PCM.
I'll post a follow up when I get the engine together and installed.
John