Here are the two scenarios for engine smoke. You had the first one right. Constant smoke will cause smoke out the exhaust pipe and if you pulled the crankcase breather off, it would also smoke there. This will be caused by bad rings. The second smoke effect will be valve guides. This will take a little rear view mirror work for you, or a second pair of eyes following you at the back of your car. When you lift on the throttle, the engine will cause a suction effect. When this happens, the valves will be open and the vacuum caused by the pistons going down, will pull oil from the worn valve guides. When you accelerate again, a puff of smoke will emerge from the exhaust pipe, and cause a bellow of smoke for just an instant. Now even though doing this will immediately show a worn valve guide, it does not eliminate the constant suction going on at every intake stroke when you just motor along. It is constantly burning away oil. You just don't see it that much when you're on the throttle. It's being burned though on every stroke.
A Compression Test is like ordering a pizza. A Leak Down Test is like making a pizza from scratch. It just popped in my head for a lame analogy. But you will get the full picture with a leak down test. You'll know exactly what's going on inside the engine as far as what is, and what is not sealing properly.
Of course, it won't tell you the guides are worn. This will take disassembly of the heads, and making accurate measurements of the valve movement, to and fro against the guide.
If the leak down pushes a lot of air out the breather tube, then yes, rebuild the the whole engine from the bottom up.
If you want to just pull the heads, guide and valve replacement will be the cheap fix. When you put the heads back on, leak down the engine again with just torquing the heads back on. No push rods in or anything else. Just install the heads and take another leak down test.
You'll accomplish two things. One will be the integrity of the head job. Meaning, no leaks from the exhaust ports or intake ports. Simply stretch a balloon over the ports and watch the air movement against each port hole. Very little should cause the ballon to move too far out. The second test will be the rings again. If you are reading over say, 5 to 9% leak down (with the new V-Job), you can run the engine for little while longer. 2% leak down is considered ideal on a well built engine.
