As Retro and I already explained, a compression test DRY and note the readings. Do another compression test with a shot of oil in the cylinders. If the compression raises with the oil, then we know the compession is escaping past the rings into the crankcase. If it does NOT increase compression then we know its either valve guides or valve seats or burt valves. Vacuum test will also tell if its burnt valves. Does matter if its a head gasket, cuz no matter what you do, either heads or a complete rering, or rebuild, head gaskets are going to be replaced anyway. Most people don't have a leak down tester, and I don't for the reason, I can diagnose with a compression tester and vacuum guage to the point of knowing if a motor is worth repair or not. We already know valves seals are gone, and possibly vavle guides since he has blue smoke at start up, but it goes away. So the oil rings at this point can be assumed good. If a compression test with oil DOES NOT raise compression, then its safe to assume a valve job just might buy another few thousand miles out of the motor. But, when most heads are redone, they get resurfaced, the valves and guides no longer leak, so compression is higher. Now you raise cylinder pressure from 90PSI to 120-130PSI and the tired rings that were working just fine, now say to hell with it and quit working. The rings are holding 90PSI fine, but how do you know if they are strong enough to hold 120-130PSI??? You don't, but in most cases, it only takes 500-1000 miles and you're now blowing blue smoke and losing compression due to bad rings and back to the initial 90lbs now. So what I am saying, many times a Patch Job as in a valve job is just a waste, where he could leave well enough alone, save funds and just go with a GM crate motor.
So, this doesn't mean you are wrong GD, I do see your point totally, but from experience, I just say the Leak down is not needed, and even if the rings are good now, and valve job is only going to be a short lived patch. And of course its JMO. Anyone else can agree or disagree, or express their own analagy and opinion too.