The Hydro-Lock response, first from Wes at CDD, nailed it right out the gate, I think. That type of a coolant leak did not start yesterday, and DaytonaBill nailed it again... but something that was not mentioned is whether or not there was a head gasket leak, possibly coolant loss, for an extended period of time prior to this turn of events. As I looked at the nice, high-res pics of the cylinder wall in the hole in question (even saving to my viewer to further zoom), I see some major pitting, which might indicate standing moisture (coolant) for a while. Also, the first pic of the first series seems to show rust at the bottom of the cylinder wall on the block casting. Maybe the "detonation bang" was not that at all, but a puddle being slammed against the combustion chamber. In fact, the first shot of that cylinder appears to reveal possibly a crack, or maybe just a stain, as stated.
Of course it's hard to start one of these in cold weather without functional Glow Plugs, and we all (should) know about 6.9L GP's, so if they're not fixed correctly, we sometimes use a little ether. This should be No Big Deal. IMHO, the title to this "Cautionary Tale", is a bit of a misnomer to include the use of Ether at all, except that the engine may not have started without it. I've used it far more times than I could ever count over the years, with Zero ill effects to any of "a hundred" different machines, including many times over the years on my '86 F-250 6.9L, which has a factory ATS Turbo from a 7.3. That engine still runs great, but will be transplanted into one of my '92s due to the older body and electrical problems that I'm tired of messing with. Provided you use it sparingly, and know you're getting fuel so as not to dry the cylinders, etc. too much, I see no problem whatsoever with using it. In fact, I plan to integrate in into the system to provide quick-start for cold weather, while limiting the duration of delivery through a remote (in-cab) pneumatic activation link and under-hood cartridge holder.
All that crud being said, I'm very happy for you getting it straightened out finally, Hawk. So now, maybe you can start doing something about that beautiful Upper Mid-West custom bodywork.
Cheers!
~Thunder