Sounds bad but.....
A compression test would tell us more. Warm it up, remove all 8 plugs and wire/affix the trottle to WOT and crank the engine over for a test of all 8 cylinders. A battery charger can help to keep the cranking speed constant.
A leakdown tester (not something most have) would also pinpoint if it is worn rings or bad valves (valve recession from what you described) and/or bad gaskets.
If your heads are that bad, replacements ala' Edelbrock aluminum heads may be the best choice although with shipping and potential import fees the price may be quite steep. Regardless, the issue is to determine if the short block (1st, 2nd and oil rings + the pistons) is o.k. and it's only the heads that need work or replacement.