Check the cam lobe lift on the problem cylinder before getting into any serious head rebuilding or swapping. Some small block Chevy engines had problems with valve guides near the heat riser/EGR valve passages tightening up and causing premature cam lobe wear (also pushrod bending) due to hot spots caused by the constant flow of exhaust gas to the EGR valve. It's usually found on the #4 or #6 cylinder exhaust lobes on mid-80's 305 engines, but I've seen the same problem on 350's. The symptom is loss of power, oil consumption, and chronic lifter noise, progressing to total loss of power on the affected cylinder due to the exhaust lobe on the cam wearing to an almost completely round shape. This stops all gas flow through that cylinder.

Aluminum heads on a cast iron block were a bad idea when Ford tried it in the late 1930's, and things haven't gotten a lot better since then. The drastically different expansion/contraction rates of the dissimilar metals cause major head gasket problems, and the engine needs to be designed to deal with that situation as it's developed as a prototype. It's pretty risky to swap to an aluminum head on an engine that was designed for one made of cast iron. People do it on race engines, but they're designed to produce a lot of power for a relatively short time. High-mileage street machines are another situation altogether. Aluminum heads also rob a lot of combustion heat that could be used to develop power, and waste it through the cooling system. They're good for max-power applications, but they're considerably less efficient than cast iron for midrange power.
Jerry


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