Rust in block and head

[Guest Ken G]

Yet another question about my 1925 Rover. I am new to all of this, so informed advice would be very welcome.

Having installed new exhaust valves, I am about ready to put the cylinder head back (with a new gasket). The water channels in the block and the head are of course rusty, not so as to block anything, far from it, at least where I can see, but with some red growths. I think they are rust rather than deposits from water, and in any case they seem hard (to poking with a screwdriver) so I don't think they are going to come away and block pipes or the radiator. On the other hand, I would assume that they form an insulating layer so that heat is less effectively transferring to the water. While I still have the engine apart, should I try to do anything about the rust, or it is better left alone?

Ken G, 1925 Rover 16/50 (San Francisco)