When I first tore this thing down, I was pretty worried about that as well. Posted a topic over at ThumperTalk, and was told that because of the way Honda heats and assembles these con rods, all of them have a blue tinge to them. Apparently it is normal.
Examples from other XRs...
I was pretty paranoid about this until it was brought to my attention that nearly all the XR con rods look just like this. I will say the the photograph makes it a little more blue than it actually appears in person, but it seems like it is fairly par for normal as far as XR rods are concerned.
The new /barely used head (hopefully arriving tomorrow) should be in MUCH better shape than what I've got. I plan to change the stem seals, bolt it on, and continue. I may take my old head and have the valve seats re-machined, and then stick it back up on Ebay. Cam slots and everything else is absolutely fine.. It was just those valve seats that were trashed.
As near as I can tell, I'm guessing that... Bike was lean from factory, and jetting was never changed. PO installed Unifilter air filter and removed exhaust baffle without rejetting, making the bike even more lean. Exhaust header cracked, further contributing to lean condition. Bike started to ping/detonate, and pieces of the head & valves were blown off & fell on top of the piston... where they scratched the sides of the cylinder up, leading to oil consumption, and finally to my discovery that the bike was using oil. That's my best guess, anyway.