I did change the auto trans fluid in the white Outback. It seems to be driving as normally as a 4EAT can.
Got B's car back in the garage. Timing belt is shredded into a few pieces. All the idlers spin free and the tensioner was extended.
Removed the engine, took off the intake and heads. All(?) the valves were bent.
You can see where a few of them hit the pistons.
Since he's had a few of these engines start to burn a lot of oil and we're assuming those were due to stuck rings, while we had the heads off we removed the pistons and replaced the rings. First pin came out fairly easily but we made a tool for the slide hammer to remove the rest. After we made and used this tool B noticed the Subaru FSM recommends using their tool which looks just like it.
The old oil control rings barely floated. None of the rings stuck very far beyond the piston either and had about double the gap specified. Bores were within .001" round and taper which amazed me for an engine with about 150k miles on it. Gapped the new rings (they were all good out of the box) and put the pistons back in. B had lapped all the valves and replaced the valve stem seals in a better used pair of heads he had. New head gaskets, head bolts, seals, timing set, etc.
Tried the old packing with grease and hammering in a pin to push the pilot bearing out trick. That didn't work.
So we replaced the pilot bearing in the conventional manner.
When I was tightening down the longest bolt for the PS pump it stripped out of the block. Not enough room between engine and condenser to fit a drill and drill bit so I could install a thread repair. Fortunately I was able to tap the hole deeper and use a longer bolt.
Cranked a few times for about ten seconds each with the coil pack unplugged so we could get some oil circulating. Once we plugged that back in it fired right up. Seems to idle a little low and rough to me but I don't know what's normal. Runs smooth when you rev it up a little to 1000-2000RPM. No noticeable leaks or smoke. Just drove it out of the garage and back in the driveway but seems to be ready for another off road adventure.