[edwardc]

With water incursion confirmed, the likelyhood of sticking valves being the culprit is pretty high. So, before you pull the head, I would try freeing the valves. Its easy but can take a lot of time. The idea is to get lubrication to the valve stems from both ends.

For the lower end, add a quantity of Marvel Mystery Oil (MMO) to the final oil change. You can replace as much as 1 quart of oil with MMO. I regularly run with 4 oz of MMO in the oil as a preventitive measure.

For the upper end, pull the spark plugs and squirt some MMO into the cylinders. Try to get an old-style oilcan with a long skinny nozzle to direct the oil towards the valves. Replace the plugs (without wires) to contain any mess from ejected oil and turn the engine over several times, either by hand or using the starter, to distribute the oil. Do this once or twice a day for several days. Then recheck the compression. Repeat as necessary. When/if you start getting compression back in 2 or 3 cylinders, try to start it. It will start hard and smoke as the MMO burns off, and run rough, but running should help work loose the last if the sticking valves.