Ideally, the heads should be fitted to the pistons after they are installed. I have done it a couple of times, once on the Merc in my '51, and another time on my 258" "Hot Rod" engine. Use the foil balls to establish where you are; have the heads milled to give you around .050 over the piston head for proper quench, and then clean the head up to a consistent .050 with a die grinder. I think trying to fit the pistons to existing heads is going to be a very tough task. Piston installation should be done first. (Just like you want to have the pistons in hand before you do any work on the cylinders.)
I have built 4 flatheads in my life, and custom fitted the heads on the last two. Maybe it's just luck, but the last two turned out a lot better. I don't worry about the head volume or compression ratio, because when I get the quench right, I end up with 160-165 psi on each cylinder and the engine runs "snappy". There's some grinding involved, so that's why I like aluminum heads. I have several sets of aluminum heads extra (including a nice set of C8BA's) so if you're interested in going that way, get hold of me.