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On an '86 535i with 130k miles compression ratios range from 152 to 165 psi. So I believe this confirms that the heavy blue smoke during deceleration is caused by one or more bad valve seals. My plan is to remove the head tonight.
The question I'm pondering now is should I have the head rebuilt or buy a rebuilt one? I'm not too excited to shell out $800 based on the prices I've seen for rebuilt ones. I'm in the Seattle area.
Any thoughts or recommendations would be appreciated.