We've also established that there is visible valve recession on one of the #1 cylinder valves. To me this is the big red warning flag. It's almost a certainty that the valve seat has parted company with the head and is simply rattling around loose in its pocket. I strongly recommend that you stop running this engine and prepare yourself for a forensic tear-down. So far you have been lucky that the valve seat hasn't slipped out of its pocket and gotten wedged cock-eyed beneath the valve. This could lead to further damage to valve train and piston, possibly even the con rod and crank.
At the bare minimum, you are looking at head replacement or repair. Depending on your budget and patience, you have several options there:
- Get your existing heads re-worked by a local shop. Given the relative rarity of type IV engines, you are unlikely to find a shop that will be able to do a satisfactory job and will likely be right back where you are now in a few months time.
- Install new AMC heads. There has been much discussion on TheSamba and elsewhere about how crappy the valve hardware is on the stock AMC heads and how it should all be discarded and replaced right out of the box. I dunno, I have been running unmodified AMC heads on my van since 2005 and have had zero problems with them. I saw head temperatures reaching up to 448 degrees last summer and they are still working fine. YMMV.
- Send your existing heads off to Len Hoffman at HAM. Len is generally recognized as the pre-eminent type IV head guru. He may decide that they are not worth rebuilding.
- Have Len re-work some fresh AMC heads for you. Though expensive, this would give you the most peace of mind in the long run.
- Check ring fit to pistons and piston ring groove condition. You may only need to re-ring your existing pistons and de-glaze the cylinder walls with a light honing.
- Strongly recommend getting your rods checked and re-furbished. New bushings pressed in and reamed on the small ends, Big ends measured and re-sized if necessary. The rods can be removed and installed from the crankshaft without splitting the case, though it is easier working on a bare crank, especially for when you use PlastiGage to measure rod bearing clearance.
- Pull the lifters and examine them for pitting or unusual wear on the face (keep them in order so that you can put them back in their original bores. An old egg-crate is handy for this). Examine the camshaft lobes through the lifter bores for unusual wear patterns.
- Check the crankshaft end-play as described previously. Additionally, do a check for excessive thrust bearing clearance that can give you a misleading reading on your end-play measurement and cause you to dial in too small an end play.
You could also go whole-hog and order one of Jake Raby's Camper Special kits for your rebuild. But if you do, then you've agreed to be part of the Raby ecosystem and will need to follow his philosophy and instructions to the letter. If you don't and go back to him with problems, he'll probably just tell you to go piss up a rope.