You reference trouble with
You reference trouble with the camshaft assembly but I'm wondering whether you have trouble with the rocker/valve cover? If you're not getting a uniform gap on the cover, there are only three possible problems. First, the cover is bent. 2nd, the cylinder head is bent. Third, something is hitting or obstructing the inside of the valve cover. Check the cover and head for flatness. Check for obstructions.
Also, before putting the cover back on or putting spark plugs back in, I'd rotate the motor through at least 2 complete revolutions gently to make sure there are no obstructions. Then, I'd make sure each cylinder is making compression (either do a leak down test or place a balloon on each of the plug tubes and make sure it partially inflates on rotation). The valve train must function correctly and move freely. If any part of the camshaft or valve train is obstructing the cover, that must be addressed.
If after checking these issues you can't get the cover on completely (it should seat completely flat with or without RTV on the head) I don't know what to tell you. Except, go to the local Pick-A-Part and get a motor. (150 to 300 bucks) Look on Row52.com. Look for a smashed up Prius with the same code on top of the block and double check under the oil cap that there isn't a milkshake appearance inside. Even a smashed front end will work...I've pulled probably 5 motors and never found a cracked block. Go around the motor with a large wire clipper or cordless sawzall and cut everything connected but leave the injector wiring intact. Then, pull bottom center motor mount (THIS IS THE FIRST MOTOR MOUNT TO REMOVE), cut or disconnect driveshafts, disconnect other motor mounts and the whole drive train will roll forward and down. I can do this in about 40 minutes by myself but it may take you longer if you've not done it before. You can also remove just the ICE from the top and there's only about an eight of an inch to spare. The drive train needs to be tilted upward slightly after the passenger motor mount is disconnected. You might want to remove yours first for practice. Just be SURE to label each wire and hose as you do. I like to use plastic shopping bags to put bolts and nuts in and then tie the bag to the part related to it. If the motor has to come out anyway, no harm done. I'd definitely consider a used motor off of eBay as well or from a local junk yard. These motors will go 300K if properly taken care of. Definitely be looking at Priuschat.com during this process. If those guys don't have the answer, you won't find the answer.