Yea, 8 plug heads are out. Basically, you can use any non-turbo head from a 1982-1990 2.3L (except for the Ranger, which began getting an 8 plug head in 1988 I believe.). Earlier heads have oval intake ports, yours would have D shaped ports. The 185 bucks at NAPA was having a complete (without cam, followers, and lifters) 1989 Mustang head magnafluxed, cleaned, new valve seals installed, valves ground, new expansion plugs installed, new cam bearings installed, new cam oil seal installed, and checked for squareness. If in fact you would need new valves, they would cost about 15 bucks each. If the plug smelled of gas, that would almost seem like an ignition problem (it's not burning the fuel entering the cylinder), but with low compression, it could indicate a chewed cam lobe, damaged valve, or leaking head gasket. Being that the block and head are cast iron, I would think they would be ok and not the cause. If you can tinker with this car, I would consider first just removing the head (it's not near as hard as it looks). If the head gasket is blown or leaking, you'll probably see it. It will come apart a little bit when lifting it off. Flip the head over and visually inspect the valves. A burnt valve will be discolored. You won't be able to see microscopic cracks or damage, but sometimes just taking a good look and working the cam by hand and watching the valves can reveal the issue. While the head is off, take a look at the pistions and cylinder walls for damage, discoloration, and scoring/scratching on the cylinder walls. Regardless if you can see a problem or not, it would probably good to have the head rebuilt. I chose NAPA because I used to work there and I know they do very good work at a good price. Of couse it will vary by area. If you know of any good engine builders or machine shops in your area, call them up and get a price. I couldn't forsee a FULL (new EVERYTHING) head rebuild costing more than 250 bucks.