A friend in the aircraft industry once explained that industry's technical description of an engine rebuild. Every part is disassembled and measured and miked for wear. Parts are then kept or replaced based on their industry tolerences for being "as new". Maybe overkill for engines in our kind of service, but great peace of mind.
Mike in GA
Actually, what you described would meet the tolerances for what the FAA calls an "overhaul". Within the terminology of "rebuild", parts can actually be near wear limits. Theoretically, if every part within the engine had a maximum wear limit of .003", a mechanic could build an engine with used parts that are all at the .003" limit, and call it a rebuilt. But it would be pretty loose and wouldnt last very long. Overhaul refers to an engine with parts that meet tolerances for new parts.
There were a couple clowns down in TX that built some engines that way, gave em a nice coat of paint and sold em as complete overhauls. I think they are still holding down rooms at Leavenworth.
I really would hate to pull my motor out and find nothing wrong with it. But I think I would really be raging if I didnt, and some stupid little thing fubared the engine 500 miles out.