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I recently purchased a dune buggy as a winter project and pulled the heads yesterday. The age of the 1600 dual port is unknown, as is the mileage, and past maintenance work.
I have zero experience with VW engine rebuilding and can't tell if the pistons/cylinders need to be replaced.
I'm also wondering if the heads need anything done to them.

Any feedback would be appreciated.

Here's photos I took of the cylinder/pistons and heads.

Clean everything up real good, look for cracks, the cylinder top edge after cleaning how much of a lip is on there? How much end play does it have?

It doesn't look as though the top end has a lot of miles on it. Question is, did it get a complete rebuild with those pistons/cylinders & heads or did they just slap them on a worn bottom end? As mentioned, the crankshaft endplay is a clue...not conclusive if good, but a data point nonetheless.

Was there any specific concern about how it ran (noises, vibrations, leaks)?

You could just clean it up and reassemble with your fingers crossed; to get any idea how the bottom end is (beyond the endplay) you'll need to at least pull a cylinder, and maybe a rod bearing or two. Personally if I had it apart this far I'd at least hit the cylinders with a glaze-breaker hone and throw some cheap rings on it, resealing the cylinders to the case.

Put some plugs in the heads and prop them up level, fill the chambers with solvent and let them sit for a day to see if any of the valves leak.

I can't judge from the photo if the compression leak on #1 has caused any erosion of the head but it doesn't look real bad from here. Do you recall if that front-upper head nut on the RH side was looser than the others?

Three of the nuts on the studs were frozen/rusted in place. When I took off the nuts the bolts came with them.

84im wrote:Three of the nuts on the studs were frozen/rusted in place. When I took off the nuts the bolts came with them.

Not uncommon. The cases with 10mm head studs had them threaded directly into the alloy case; when doing a thorough rebuild on one of those it's advisable to have steel inserts ("case-savers") installed but it isn't mandatory, especially if you aren't planning to hot-rod it much. It doesn't look like the head is damaged enough to need flycutting on the cylinder seating surface; you could use a cylinder, some valve-lapping compound and some elbow grease to see if it'll clean up without any machining.