your posts are actually funnily stupid, how the hell could the spark plug be hitting the edge of the piston?
Could well be that it was the spark plug at fault. If the electrode fell off and it CAN happen, the plug could have been changed and the loose bit left in their could have caused the dent then it went out of the exhaust.... The piston is shagged, check barrel and head for scoring or impact dents and replace piston with new rings. You don't want the thing cracking or something stupid later on. So while you have it all apart do the right thing.
It may have been caused by a to tight a squish, hitting the head? the base gasket was a touch on the thin side? I would clean it up, new rings and put it back in !. If you do change it, I'll take that one off your hands !!
