The problem with the o-ring theory is the oil would first need to get past the cooling system openings, then the metal ring in the head gasket to get into the conbustion chamber, and this same leak would show up in your compression test, which were all nearly even.
The pictures of the valves you're showing are intake valves, not exhaust. Lots of carbon, and they look a little wet to me. I'm thinking you either have carb issues (which would cause the smoke and crappy running), or oil is getting into the intake port. The only two ways this can happen is: a crack in the head, or VERY badly worn intake valve stems/guides/seals.
Is it me, or does the bottom 1/4 of your #2 piston look like liquid was sitting in the cylinder? I'd check the #2 carb for a leaking needle valve.
The pictures of the valves you're showing are intake valves, not exhaust. Lots of carbon, and they look a little wet to me. I'm thinking you either have carb issues (which would cause the smoke and crappy running), or oil is getting into the intake port. The only two ways this can happen is: a crack in the head, or VERY badly worn intake valve stems/guides/seals.
Is it me, or does the bottom 1/4 of your #2 piston look like liquid was sitting in the cylinder? I'd check the #2 carb for a leaking needle valve.