Tom, I'm pretty sure that the previous owner means simply that the cylinders are "out of round." There's a few reasons for this, but it means that the cylinders are not perfectly round, so the rings will not seal well, and will do things like burn oil, leak down during the compression stroke, and so forth.
It may not have been properly bored, or the boring was done badly, or it could have warped over time due to something like overheating.
There's no solution other than reboring the engine. The block can be saved if there's enough thickness in the cylinder walls to accomodate a re-boring from a machine shop. If it's a 350 block bored out to 355, then there should be plenty of thickness. What you have to do to correct this is rebuild the engine, and be sure to have it sonic tested to see the thickness of the cylinder walls. If they are thick enough, you can rebore, but if not, then you know you need another block.
If there's no problem with the way the engine runs, or if the problems aren't bad enough to make you want to rebuild the engine, then your engine is fine for right now. No smoke, no noise, no loss of power, then in all no real problem. There's probably a lot of "egg-shaped" cylinders out there that people may not know they have. Again, the "egg-shaped" condition just means that the cylinders aren't as round as they could be. Keep in mind that things won't get better though, only worsen over time.