Thanks guys! Appreciate the kind words and vote of confidence in the investment. I really do love these wagons-- and my girlfriend does too. Fortunately
Given that I performed the valve check/adjustment compression test on the cold engine with these results, it is on to the leak down test.
I actually tried this myself right after the valve adjust and comp test last week, but wasn't getting any pressure loss at TDC. I made sure the cam lobes were facing outward (valves closed) and was unable to register any leakage at 100psi. Stone cold engine-- or at least as cold as can be after 1 day in ambient SoCal temps.
It isn't clear if my leak down tester is garbage (I paid $50 or $60 bucks I think), or if I was setting up the test incorrectly. In any case I'm going to swing by my mechanic's shop down the street tomorrow and let him give it a go.
Honestly I've come to terms with having to remove the head for machining and gasket replacement. I'm even to terms with having to replace the head if it is cracked. $1200 for a wagon head from Metric in the valley. However I will certainly give the nice-used-motor route a shot. I'll put some feelers out there and keep an eye on the classifieds to see what comes up.
Diseasel300: Thank you for the rec on the injectors. I definitely prefer to avoid pop testing in my small, hot, un-ventilated garage.
Question: Is there a way to test rings with the head off, or is a visual inspection more than adequate? I was thinking it would be a good idea to test the rings before and after a good Kroil soak...