Did it lock solid when you were riding?
Looks like it could have been a pretty nasty experience..
As said above it looks like the chain ended up slipping due to the tensioner and that would have ultimately resulted in the piston coming up with a valve still open.
What happened to the valve stem, I guess you removed that on disassembly and it was still held in place with the collars?
(i.e. you didnt also drop a valve right?)
Man thanks for sharing the pics and story. Hope you source another engine cheap mate. Good Luck.
One of the Savages I have, also came to me in bits after the same problem you have experienced. But I cant find a spare engine here in Australia and the previous owner threw away the head, Cam and barrels et.c.. So a rebuild isnt feasible.
Looks that LS650s are thankfully popular over there so hopefully you can get decent spares cheap
...Note to self.. Make sure to order the modified tensioner!!!!