Thanks for all the input guys! I was suspecting the cam and was hoping to hear the same from someone else. I can't think of anything else that would effect compression like this, although I have difficulty understanding how it would effect it by 25 psi. Does the exhaust valve open before tdc on the compression stroke?

I drained the oil yesterday thinking I might find some metal if in fact we did knock a lobe off the cam. Didn't find anything though.

To check the lift on that exhaust valve can I just put an indicator on the lifter and compare it with another? Who knows maybe it will be easy to see if it is not opening at all.

I would sure like to think it's the cam - much easier to fix.