I have a '81 300TD wagon with 275k.

I'm starting to go through a little oil. Nothing too serious but there are drips on the garage floor, driveway, and definitely on the bottom of the engine. I do not know the origin, to be exact.

The car does not smoke (excessively) and is perky. The only time I think it's a little doggy is trying to pass another vehicle when I'm already going 65 or 70.

You may have read my recent post regarding my mechanic's valve adjustment- without really digging in deep (I was on a time schedule) he was guessing that it was starting to leak at the main seal. He also noted oil in the air cleaner assembly, suggesting oil is getting by the valves (is that correct?).

He also said that it was exceedingly easy for him to turn the engine over manually and that this seemed to suggest poor compression.

Also, most of the valves were so tight they were barely moving at all.

Classic chicken v. egg: poor compression due to tight valves or some other process?

Again, he doesn't usually shoot from the hip but I was getting ready to go out of town so he suggested backing the valves out around 1/2 way to factory specs, to run it for a few 1000 miles and then bring it back in.

This is our only car. If it's going to need replacement, I want to know in advance so I can plan ahead.

What should be my next step?