If they were driving it with the valves out that bad, one or more might be burnt... Thats how my current engine is going out. I went on a 2500 mile trip and she started running rough half way there, I thought it was a batch of bad fuel since 2 bottles of diesel 911 helped. But by the next time I stopped, about 500-600 miles later, it sounded like you described. Compression in cyl #1 went from 400 when I bought the engine to 200 after that trip.

The smell in the oil is perhaps from the burning of the vegatable oil and basically never changing it. It should be changed as something detrimental could occur from an oil vegatable base combination.

Also the injectors could be restricted to some degree from using the wvo. This is another possibility for the power drop. It does sound like this particular car may have been in service a long time with little if any standard maintenance.