OK, so there is certainly something strange going on with #5 cyl. so it's pretty certain that the head will have to come off.
All other speculation will be put on hold until I do a compression test with my equipment and put a vacuum gauge on it.
As predicted, the client is taking this opportunity to talk about replacing the engine.
He really likes the truck, loves driving it, but his one lament has always been " I'd drive it more if it only had more power".
So before we do anything to this engine, he wants a list of options , degree of difficulty and cost, of different engines.
It goes against the grain a bit because I do restorations. However, I'll comply.
I only see 2 options - late model 261 or early small block (283, 302, 327).
All of those should bolt up to the 700R4 with little problem and both will need new front engine mounts. I have an old 283 in the back of the shop so that could be built up as any of those 3 sizes.
261 would have to be bought remanufactured.
Guess I will have to shift that discussion to the modified forum to find people who have done it and what the clearance and installation problems are.