It would be a pretty hard to have good compression and smooth running engine with the valves adjusted wrong. I too suspect hydraulic lifters. If you rotate the engine to #1 TDC and both rockers have zero lash, rotate one more turn back to TDC, if they are still at zero lash you have hydraulic lifters, other wise you would have low compression and/or back fire up through the carb and out the tail pipe.
To adjust a hydraulic lifter, go back to compression stroke on #1 cylinder, TDC, its easy to find if you just watch the rocker movement. When the intake rocker just closes, the timing mark should be getting close to alignment and the piston should be almost to the top of the bore. Once you get to this point, back off the adjusting screw till you can rotate the pushrod with your fingers. Slowly tighten down till you get to zero lash, then give it a 3/4 turn down. This will put you in the middle of the lifters range of travel. You can do both rockers at this time. I like to do each cylinder then rotate the engine till the next two valves are closed. It's just the way I like to adjust valves.
If the valves are adjusted with only zero lash and not the added 3/4 turn, you can have lifter rattle when cold, and it might explain the rattle at higher rpm as well. If you find after checking the for solid lifters the way Jerry spoke of, that you in fact do have solid lifters, then adjust them as needed using feeler gauges. You should be able to squeeze the oil out of a hydraulic lifter in a fairly short amount of time with a long pry tool.
Joe
