They can be machined quite a bit if your machine shop knows what they're doing. You have to recess the valves & seats back to spec after taking a good amount off the surface, and if you take enough off, you have to machine the intake surface so the clamshells still line up, I am told.
I've had many LB7 heads surfaced without issue. By the time you pay for the valve seat recession and a valve job on top of it, it isn't cheap, but it is cheaper than getting new heads or having to pull it all back apart because warped stock heads were just slapped back on.
The different gasket thicknesses are to account for varying piston protrusion from engine to engine. The Grade C is the largest, and you can generally just run Grade C gaskets without issue, but if you know what it had on before, just use the same grade. You can also measure the piston protrusion and look up what gasket is needed. Each bank is done individually, so it isn't uncommon for an engine to have two different gasket thicknesses.