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Just got a message from the instructor at Tech. school. Had him do a compression test on Old Rusty before sending him over to the body shop section. Think I've got a blown head gasket. 2 adjacent cylinders low ( only about 70 lbs. He says that's about the minimum for it to still fire. ). If I remember right from what I've read here ( probably Conanski ), that's what it means when the 2 cylinders are low like that. Have serious doubts about the " Jasper long block 40,000 miles ago " part of this. Don't think this guy believed in maintenance, but still think a head gasket shouldn't give out that quick. Plus the instructor also told me the other day that he heard a little bit of piston slap on #1 cyl. He said that's pretty common on these 302s at around 100,000. He said it'll still run for a long time, it's just something about 302s that they eat the #1 cylinder out like that. Just hoping for conformation, don't want to even think about another engine or anything like that.
Low CR on 2 adjacent cylinders is most likely a head gasket, it should not have died at 40k but there's a lot of cheap overseas products going into these rebuilt motors now so it's a wonder they last at all.