Most commonly, the valve problem will a "tuliped" (worn-out) intake valve; that happens over time, allows progressively more reversion into the port and manifests as a blackened intake port. In extreme cases, the intake and even the carb throat will turn black. With this, specific motor, however, I suspect that one of the valve faces & the seat are rusty. It only takes one relatively tiny flake of exfoliated rust to keep the vale from fully seating and,voila!, massive compression bleed-off.
You could try rotating the crank to the compression stroke, which leaves both valves closed, then introducing solvent into one port at a time. Brake cleaning solvent will find the smallest gaps. That said, going by your description, I'd pull the head. It's a quick job and will answer your questions in a fraction of the time we can spend trading guesses in print. You're going to end up having to do this anyway, may as well get to it ASAP...you'll be glad you did.