I ran into a similar situation with my old BMW. Yes, you need to loosen the motor/tranny mounts and jack the engine up. It doesn't have to be completely removed, you can still leave the drive shaft intact, but it does have to be lifted up. I never heard about removing the valve cover (the additional clearance would be minimal) but it makes sense if you cant lift it all the way up. Try removing the throttle linkage at the firewall. I just loosened my oil pan after removing the bottom one and slid it out towards the rear of the vehicle, cleaned it up and installed a new gasket.

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1963 Ford F100 - Cummins Swap?
1985 Mercedes 300SD - 210K
1992 Ford Festiva - 92K
2001 Ninja 250 - 8K