Do you have any links to the cast LPG pistons? All I could find was threads from years ago saying they hadn't been in production for several years. I might still pick up a set if I can find them.
I know the factory/standard bore is 3.875, but that was fifty years ago now. The 292 I'm putting together was/is .030 over, and my 250 in my truck now is also .030 over; very common number for rebuilt stuff. .030 over previous rebuild +cylinder wear might mean you would need to go more than .040 for it to clean up nice. On the other hand, you might take it apart and find a nice low-mileage/recent rebuild bore that can just be cleaned back up with a light honing; I would personally feel kind of bad taking an engine that could be put back together standard/like it is and throwing away money and future rebuilds boring it out for nothing (especially with something odd like a 292 where blocks are kind of hard to find and long out of production). On your third hand, you might even find it has already been bored out .060 over! You need to have it apart to see what size bearings you need and/or if the crank/rods need work, anyway.
Have you checked the current bore size yet? The blue head gasket residue tells me that someone has at least had the head off before. Sometimes the overbore will also be stamped on the front of the block by the waterpump.
Oh, your niece; no worries then. No mercy for the relatives!
It's not like they can decide to not be related to you.