paint is soft. Put the bike together with plenty of grease in the headset. Adjust and ride. You'll probably need to readjust a few times, and the headset may feel sluggish and had to adjust at first. But soon enough the movement will wear through the paint and the whole bearing will stabilize. Once you feel it has (it holds adjustments and doesn't feel as sluggish) pull it back apart, clean out the grease and flaked paint, then repack.

BTW- the paint not on the now silvery ball track doesn't matter. It'll still be there years later untouched.

You can reinstall the cranks, and use the same or other methods to remove them in the future. The damaged removal treads have no effect on installing, so the worst that'll happen is you'll have the same hard time removing them down the road.