Yikes. I agree with Spamby, it could be multiple issues. When I was first reading your description of the problem, spark plug gap was the first thing that popped into my head. As Alin said, a compression test is a must. It will give you a fairly accurate indication of the health of the piston rings and ringlands (which are a known weak points in these engines, especially if modifications or repair work was not done properly or the tune was lacking).