I would agree with your logic. Just not sure if this is the car though. Would be nice to get it running again, but not willing to sink a fortune. I just tried to pressure cylinder #1 will little success. Pulled the valve cover off, made sure both valves were closed and all I could hear is air coming up through the timing chain housing. Just for giggles, I pulled the intake and exhaust manifolds off to make sure the valves were holding, but there may not be enough pressure to know for sure but whether they are leaking. With that said, I would guess a cracked ring or a hole in the piston. The weird thing is that this was the best of the cylinders when I did my compression test at 300 psi. It is a harbor freight tool I should note. Not sure what is going on.