There's generally no need for planing, leat alone a new head. Just inspect the head closely for cracks then check for flatness with a machined straight edge... and check the block as well.... or at least take the head to a good head shop and have them check it for you. Head gaskets are more or less a rite of passage for 201's on their journey to 10K hours.
You're likely not seeing oil in there it's just combustion byproducts. When you put everything back together get a bottle of cooling system flush (a good commercial product).... something you find at NAPA or a NH dealer. Use as instructed on the label, then flush, flush, flush to get it all out (until it stops foaming). This is also a good time to take a close look at the water pump (bearing) since you're in that deep anyhow.
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Today's Featured Article - The David Brown Rose Badge - by Samuel Kennedy. In the 13th century civil war was raging in England. Two English noblemen were involved in a conflict which became known as the War of the Roses. The Duke of York had as his emblem a white rose and the Earl of Lancaster had a red rose. Today the white rose is the official emblem of the county of Yorkshire and the red rose has been adopted by the neighboring county of Lancashire.
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