Rebuilding 7.3

So you bought a bad engine to replace a bad engine? Yes, you most definitely need to change valves if they touched pistons. Even if they look fine, you could have a "low or no" compression problem. Do you have a machinist near your location? A specialist in engine specifications with tools for checking the parts? If you don't know what caused the engine you bought to fail, you may be installing the same problem into your vehicle. It needs to be carefully inspected by a specialist.

Did you check the timing marks before disassembling? If the valves contacted the pistons it's likely the timing chain jumped, probably from the engine ingested water. Do the bearings look like it ran out of oil? Any metal shavings or scorched looking parts? Do the crank and cam rotate without runout with a dial indicator?

Make sure the engine did not seize. Get a good look at the main and rod bearings and make sure no push rods are bent. Check for a good rotation of the crank and that the pistons all reach the same height of travel.

You're right, gear driven. Either way, timing marks should be checked for TDC to help determine what caused the engine failure.