Definitely worn into the bearing area. I guess I know the proper answer is to get a new camshaft and cylinder head housing since the bearings are worn and the camshaft is more than likely way past the maximum runout.
The bike runs decently once it gets warmed up. So my next question is what would be the consequences of leaving it in the state it's in? Just the valves not opening all the way since the valves should be able to close all the way even if the cam is worn out, right?