For one I do not ever remember seeing valve stem heights that bad. Two you obviously have cylinder leakage. Three it will never be right in the condition it is in. Myself I would do the leakdown test. If its valves then I would pull the heads. I would then measure the cam lift to get an ides of what is in there. If what we see now on the heads is any indication of how the rest was done you no doubt have a time bomb.What makes you think the head is messed up? Maybe just need new valves and an adjustable rocker assembly?