One thing I always like to do before I jump in head first into a rebuild is to go through the disassembly process slowly with the purpose of determining what is causing the problem as I go.
As panic mentioned above, pull the rocker arm assembly before you pull the engine. Once that is out of the way, take a dead blow hammer and rap each valve stem and watch for a rapid return to fully closed. There should be a satisfying thunk when they close. If they rebound slow or you don't hear a nice thunk, the valve guides may be gummed up.
Since all of the valves will be closed with the rocker arms removed, you can now apply air to a spark plug hole and listen for where the air may be leaking out. Some compression gauges have a fitting for an air compressor on them.
1) past a burnt valve.
2) past week rings.
3) into am adjoining cylinder due to a bad head gasket.
