The situation shown in the picture suggests that something (???) in the valve train is
way off. The shorter 2.9 valves should add about 0.030" to the total valve lash and the reground cam base circle could potentially add another 0.060" to 0.090" for a total
increase of about 0.120" to 0.150". Decking the block and milling the head should
reduce the valve lash increase by twice the total amount of material removed (e.g.; 0.010 + 0.010" = 0.020" x 2 = 0.040" total lash
reduction). Changing the head gasket thickness also affects total valve lash by twice the amount of the thickness change. I would not be surprised to see the total valve lash increase by 0.060" to 0.120", but the picture suggests a
MUCH larger increase. Some possible reasons could include:
Too much camshaft base circle reduction?
Wrong lifters?
Wrong pushrods?
Wrong rocker arms?
Wrong rocker shaft stands?
Extremely thick head gasket?
Worn rocker arm bores?
Worn rocker arm shafts?
Lots of questions and not many answers.