Recently removed the head to have some work done on it and didn't notice till yesterday that there is some discolouration and a very feint depression about 2/3rds of the way down the cylinder on number 3. It is a horizontal ring probably about a third or half way around the bore.

It looks like this is a consequence of some moisture getting in when it was left standing for a year or so, albeit inside a garage. The fact that I can feel a slight depression in the wall with my finger nail is concerning... So, the engine has been running fine (race use only) but... what to do? My inclination is leave it alone and crack on. Any solution would involve engine removal, total strip down, honing probably would remove, but then maybe rings and whatever else. So, thoughts if anyone has encountered this!

The depression is a worry but there are only 2 options fix it or ignore it and you seem to be erring towards ignore it.
You need to accurately measure the bore at the depression point and all points around to see whether you could hone it out, I have removed ring stains and light water marks from bores with a 3 leg deglazer which is not hard to do but stripping it down and cleaning afterwards is where the effort is.

Thinking about it, this must have occurred around 3 or 4 years ago after the engine was left unused for 3 years. I presumed because it was in a warm garage that it would be fine. Since then it has done 2 seasons' racing I'd estimate say around 30 or 40 hours and it must have had this issue throughout that time. We're just getting ready for a rolling road session, then test day and then first race in early April so an unplanned full strip down and fix is not desirable right now. This goes against the grain for me and I hope my analysis is effective. I might find a decent gap between races and get it done then as long as all the plans are in place to get it repaired, or the block replaced. Might even build up/obtain a new bottom end and block and do it that way.

The rest of the bore, above and below looks unmarked, with even cross hatching etc. I'll try and measure it and update progress(!)

Have you thought of doing a compression test?

Yes, as soon as I've put the head back on, re shimmed the new cams etc I will definitely be doing that.

Compression test
Unless readings are really poor Carry on using it
Build up a spare block in the meantime and swap it out if needed or during the winter