I'd think twice about putting money into a head rebuild with those compression numbers and that mileage. It seems likely to me that the rings are reaching the end of their useful life also. I'd consider rebuilding the engine but more likely, I'd look for a good used engine to swap in.

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1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13