Replaced valve spring, did not make a difference.
The engine did not spin over to BDC when shop air was applied, it might be because I put regulator on @ 15 psi.
Leaked the whole time that I was doing it unless I pressed the valve DOWN approx. 1/2" into engine (no audible leak over compressor running)
Also found some weird pieces of metal further down on the valve's shaft when I removed the collets from it and pulled the spring. I guess they are the valve seals so it might really start burning oil.
I hear that Ford 305 CI are good motors. This is one better as it is a 306 CI (7 divided by 8 cylinders * 350 Cubic Inches)