Well, in MY circles, 120 degrees is 1/3rd of a turn......
But turning it backwards is not useful...... The cam chain tensioner is on the slack side of the chain, the side behind the crankshaft pulley. The part of the chain before the pulley is kept tight by the drag of the camshafts being pulled along. When you turn the engine backwards that side of the chain goes very slack, and going forward then could very well miss a tooth on the sprocket if the slack chain hangs far enough.
It might not be as much of a factor with the engine upside down, but generally, you don't want to be turning the motor backwards.
As for freezing up, it would need months and months and months for anything to corrode itself together in there.
Absolutely check the timing, but don't automatically lay it on the, um.... previous tard.
Also, absolutely check compression before firing it up. If you bent a valve, you want to know about it. I certainly hope not!
Good to see those drive gears side by side. I don't think you would have even been able to install that shaft with the Gen-II gear on it, but with those differences in the teeth, I don't think it would have worked very well even if you could.
One other thing..... I remember you mentioning the "gear thingy the clutch housing spins on." If it's the thingie I pointed to in the picture below, then yes, it's timed..... That is one of the balancers, and the engine will be ROUGH if that's not in the right place.
There is a punch mark on the balancer. You put the engine at Top Dead Center, find the tooth of the clutch housing that's pointed straight at the centerline of the crankshaft, and call that tooth #1. The punch mark on the balancer goes between teeth 16 and 17. If you can't get the clutch housing in and have that tooth count right, then you need to remove the balancer at the top of the case, behind the cylinder block, put the clutch housing in, and then reinstall the balancer to fix its timing. I found when I was putting the clutch housing in that it was quite difficult to line up both the balancer and the dogs behind the housing that went into the oil pump drive. I found that the balancer naturally hung with the timing mark exposed, and I could get the right gear on the clutch housing (primary driven gear in the parts fiche) meshed, but then I either had it wrong at the crankshaft, or I couldn't get the oil drive dogs to fit. It took me a LONG time to get that back in, because I did NOT want to have to pull the balancer, but I did get it without having to pull the balancer.