I was not saying that you [/i]couldn't[/i] do it, and although you have a nice shop and all, there is more to engine machining than there is to most other types. I've done some engine machine work, and have hand built over 100 engines. My main concern on the overall project is the effect of moving the camshaft journals from their original centerlines. I haven't read that article yet, so perhaps it is addressed, but regardless, it is an issue that should be considered.
I would never recommend lapping aluminum. You'll never get the grit out. Due to it's soft nature, it will be embedded in the aluminum and be next to impossible to clean sufficiently. Sometimes surfaces like these are line-honed, but the better way to go, IMO, would be a burnishing tool. Better finish, harder surface for better wear, and excellent size control.
Naturally, using a lathe in that manner is possible, but measures must be taken to ensure very close alignment with the existing bore. As others have said, if the head is scrap now, you've little to lose, and much to gain if you can perfect this process. If I have a HBM, that would be my choice of "common" machines, not having the special automotive machines, but a lathe could work.
Check out the article Tony. The cam bores are at the center of the block so the centerline will not be moved if the boring setup is done correctly. I think you are referring to an overhead cam mounted in the head which would have a split bore. Also, he is overboring the holes so he can add cam bearings. I still think if it was me I would send the block to Gene Wilson just to be on the safe side.