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Could be rings, valves, head gasket or a combination of stuff. With just a 20lb increase with oil sounds like its time for a new engine. Pull the head and check it out.
That's how my 81 was after the head corroded far enough so coolant blew past the sealing ring on the head gasket. Sat for a while and seized, bumped it in 5th gear to break it loose then drove it some more Changed the head and the cylinders looked like they'd been sand blasted, but after driving it a little while it still had over 150 psi in each cylinder.Probably better off doing like you said and just drop a better engine in it, then you can go back through this one at your own pace, find a real problem and fix it without being hurried.
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