All, I am in the process of rebuilding a 400. I decided to rebuild the 400 as compression test determined low compression in cylinders 4 (120 PSI) and cylinder 5 (140 PSI). The leak down test (performed twice, to help pinpoint where the compression leak was going) indicated that cylinder 4 was leaking past the exhaust valve and could be heard coming out the tailpipe. There was a 42% loss in cylinder 4 (indicating poorly seating valve or other issue) and lesser loss of 20%+ in cylinders 5 and 6. Needless to say, the engine was tired.

After pulling the engine apart we identified a hairline crack in the exhaust port wall of cylinder 4 (picture attached) /passenger side cylinder. I assume that this crack may be contributing factor to the low compression in cylinder 4. It does not however explain the lower compression in cylinder 5 and 6 (which I think is due to poorly seated valves or other factors). Of note the crank also had a bit of rust on it indicating that water had seeped into the engine block at some point. And the main rear seal was leaking.

So, few questions that I welcome lessons-learned based suggestions on:

1. should I attempt to weld repair the passenger side head or just get replacement heads (I have the original 670 heads)?,
2. if replacement heads, given the costs of buying and refurbishing the heads, does it make sense to stay original or just get new aluminum?,
3. any other suggestions on what could have been causing the low compression (and leak down) and water entry into block?

This car is a weekend cruiser. I would like to boost the performance a bit - but do not want to complicate the build. I want to run 91 octane pump gas. I plan to regrind the crank (cast /nodular), replace the 066 cam with a 067 or 068 and am considering long brand exhaust manifold to increase airflow. Rochester carb has already been rebuilt with larger jets. Thanks in advance!