hole burned in cylinder sleeve?
 

I'm wondering if anyone has seen something like this or might know what could have possibly caused it. I recently had my motor built by a local machinist; he was highly recommended by a friend of mine. I followed his recommendations for break-in procedure; idled for 5-10 minutes, changed the oil, drove it pretty hard, with lots of engine braking, for about 20 miles, changed the oil; changed the oil again at 300 miles and then at 1000 miles. I performed a compression test, and cylinder 3 was significantly lower than the others, about 33% lower. Wet test confirmed a problem with the rings, so I took it back to my machinist. This is what he found.

It looks like someone took a torch to it; it looks melted. Machinist claims it was an injector failure, that somehow it was possibly spraying in a stream and spark was igniting it, turning it into a flamethrower. Since the piston wasn't damaged (and because it doesn't make much sense to me) I'm looking for other possible causes. Anyway I asked around and nobody has seen anything quite like it so I thought I would ask here. This forum popped up in a Google search for engine building forums.

This is a direct injection turbocharged engine with custom high compression pistons. Fuel injectors spray at 1700 psi at WOT directly into the combustion chamber.

Welcome to the forum...
I don't have a lot of exp with rebuilding or sleeving, but a general observation is that it looks more like a defect in the sleeve as the under lament appears to be untouched by the "burning" The aluminum I would think, would burn much easier then the steel sleeve...
Or there was a crack defect in the sleeve and fuel got under it and when ignited, blew the cracked portion out...

That makes sense. Also this was bored .020 over, so the sleeves are slightly thinner; for reference they can only be bored .040 over.

Another thing: the intake manifold was bead blasted and painted; I cleaned it thoroughly but not well enough. When I removed it I saw an oily residue in the runners with beadblast media stuck in it. Could a grain of that glass cause this? I'm not seeing how, but like I said, I'm trying to find as many possible causes so I can have a solid engine when it's finished. I don't want to rebuild it a 4th time.