I would have diagnosed it as valve seats gone. Seldom do rings crack or pistons get a hole in them. If her car had platinum plugs with multiple electrodes, its the valves. They tend to break off and get stuck in the exhaust valve - bang!

A compression test will not tell you what is wrong, only that something is wrong. New valves and head is a lot cheaper than a new engine. Call some reputable salvage yards for estimates. But, you can only tell what the damage is after you pull the head. Remember, there is only a liquid gasket on the white engines, and it is rollered on.

Try to keep the car, if you can. Tossing $9K is not my idea of fun.

Klaus