Upon further testing, we found that number 4 cylinder was marginal in holding pressure on a simple compression check.  Max psi on #1 cylinder was around 178psi, which is totally normal.  #4 and #5 were both fairly low with 140psi on #4 and 150psi on #5.  The others were in the mid 160 range which is decent for a 140k mile engine.   Since the compression was ragged and uneven, and smoke was observed only upon initial acceleration after idling, we surmised that the stem seals were defective.  Some oil traces were found in the head above #4 at the valve stem seal area.  With the head off the vehicle and turned upside down, the #4 cylinder didn't hold water.  As a test of the top end, you can remove a cylinder head, tip it upside down, put water in it and see where the water leaks.  Sure enough, a leak was indicated on #4.   This basically indicated that the valve seat (not stem seal) was causing the leakage.   The leaky seal could be responsible for damage or causing the seat to fail, though.  The reason for the smoke could only point to a stem seal, though- the seat would have nothing to do with oil burning.

A leakdown test was performed while the head was still on the car.  The results of this test indicate that #4 cylinder was leaking at the exhaust port.  The leakdown # was 65/80,  Good numbers on a 140k engine would be 70-75+/80.

With the head exposed but still on the car, we could see some remnants of dried coolant (see picture) above the 3-4 cylinders.  It is unknown whether this fluid came through the head gasket or leaked down through the throttle body or some other area.   Upon removal of the head, the gasket areas around the sealing area of the head indicated a small possible leak, but nothing obvious.  This could also contribute to a low compression situation although a leak down test didn't reveal any noise through the head gasket into the cooling system.

The head was reconditioned, a 3 angle valve job was performed, and the head was ported on both sides.  It was re-assembled with stiffer Crower valve springs and a Crower 268/270 regrind of the original cam.  The reground cam also has significantly higher lift.   The regrind of the cam altered the basecircle necessitating lash caps on the stems themselves.   It also required some esoteric shims that Lexus doesn't normaly stock.

With the head back from the machine shop, a new NA spec headgasket was installed and the head was re-attached and torqued to the car with stock head bolts.

With the head back on the car, we re-tested the engine with another leak down test.  This time the test came back with lowest cylinder at 78/80 indicating exceptional sealing.  Piston rings, cylinder walls and pistons themselves were cleaned and deemed to be in very good overall shape, especially given the mileage.

The re-assembly process proceeded, the stock but ported lower and upper manifolds were fitted, the slightly ported throttle body was fitted to the stock fuel rail.   An EGR bypass mod was installed, with the EGR system completely removed from the system.  A replacement Aeroquip oil drain hose was fitted to the lower oil pan to replace a failing one.  It was determined that the original hose was not cut to the proper length, with the extra slack causing a kink and oil backup resulting in huge amounts of smoke on some occasions.   A word of caution to Toyomoto kit builders- this hose as supplied is not the correct length.  The kit instructions suggest cutting to a short enough length to avoid kinks, which was not done.