I would probably leave that heat shield on - it does keep some heat away from the oil in the lifter valley, regardless of the condition. As far as being dented - it got dropped - HARD - sometime in its life. That exhaust heat passage should be cleaned out as well - did you have a bit of an oil leak from inside of the valley there? A good Fel-Pro Perma Torque gasket (the more expensive one) should seal those pits.