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Pull both rocker arms off #4. Check the height of each valve stem on #4. They should be even. Use a straight edge across the top of the valve stems and measure each side, and look closely to see if each valve is the same height as the other. Could, maybe, might, be a bent valve.
Either way it seems the head is coming off. Wish I would've hooked the gauge up a bit sooner to notice that vacuum needle bounce and maybe noticed the metallic tick a little sooner. I'm guessing the exhaust valve is burnt from when it could open less and less until the rocker just came all the way loose.
Never mind I went back and saw your post to do just what I listed below but for anyone else I left it.
You don't need a leak down test gauge setup to check of a cly. holds air.
Pull the rockers on that dead hole, rig up a way to put air into that cly. and let her rip!
You don't need a lot of air PSI just a lot of it. This is where a gauge on the line going into the motor will help.
If you are sending 40 PSI into the motor but the gauge at the motor reads 0 you got a problem.
Pull the air filter & oil fill when you do this and give a listen if you hear air coming out them or the tail pipe.
A little air from the oil fill would be ok as you will most likely have a little leak by the rings but the gauge at the motor should not read 0maybe 30?
Being you had compression on #4 till you messed with it you are OK.
I think with the higher lift of the new cam someone loosen the rockers to get compression back and the motor to run.
Not knowing that the nuts / bolts could not be adjusted and left loose or the rocker would fall off.
Shorter push rods would ne needed if that is the case.
Dave ----
I'd just pull the heads and see what you have to work with and what it needs. it probably didn't get parked for a decade because it was running super great.