351cj chainsmoking at startup

[threefittyone]

Hi-
I've been reading this board for a while, first post.

I have a 351 cj that on startup smokes like James Bond's DB-6. I mean, this thing smokes like nothing I've ever seen.

There is no oil accumulating in the air cleaner housing and the filter is dry.

There oil drips from the exhaust during startup, and then leans out, and when the engine reaches operating temp, the smoke subsides.

I ran a dry compression test with a craftsman tester, and all 8 cylinders were within 5 psi of 150psi.

I pulled the valve covers and discovered that back in the 80's the valve stem seals were replaced with what looks like teflon seals (nylon?). I only pulled the springs on one cylinder to have a look at them, and nothing looked apparently wrong- they were tight around the valve stem and around the guide.

Next, I ran a cold leakdown test using a homemade tester. The air hose was regulated to 120 psi, and I used a campbell hausfield regulator/gauge setup for a spray gun (which I regulated to 100 psi) and connected the flexible line.

The results were all cylinders leaking down 3 to 5% using this crude tool. I can hear the air escaping into the crankcase, but no carb, radiator or exhaust sounds.
(the next thing I'm going to do is add a second gauge after the CH gauge with a 1 mm damper in between, hoping that will provide a more refined reading)

Can defective valve seals be the culprit here? Other than a defective head gasket seal could cause this much oil loss?

Thanks. Tom