I appreciate all the responses. After much analysis and talking to engine building experts, here is what I have found:

The head gasket and rocker arm failures are 2 different failures.

The head gasket was most likely damaged during installation by a moron. If you look close, the location of the gasket damage in the front to back direction is inline with the dowels (which were probably in the head during install). My best guess is that theey were damaged, but did not leak until I started the engine and stared fiddling with timing, etc. I have replaced the gaskets with the correct ones, so I'm crossing my fingers.

The 3 failed rocker arms were probably out of adjustment and had little or no preload (as opposed to 1/4 turn tight to the hydraulic lifters). ALSO the guide plates were never moved to align the rocker tips on the valve stem center properly. Therefore the offcenter rockers rode on the outer edge riding up and down the edge instead of across the flat valve stem tip. This may have caused them to loosen. In any case, they were loose, which caused them to start banging even harder. I am replacing the rockers with full roller rockers, and I will align the guide plates properly before, and then after pre-loading the lifters.


Short answer is that the person who built the engine up originally did a poor job at best, and that is what caused these failures. I have decided not to tear the engine apart to look for other mistakes.

Thanks again. Thought you would all like to know what happened.