Steve:

Everything you say is correct and plausible but investing $515.00 on a valve job plus your labour (sorry about adding the "U") makes for one expensive 998 engine-

This said it will be reliable but at what price ?

A few years ago when everyone was dumping 850 & 998cc engines in favour ( there is that "U" again") of big bore engines, these "throw away engines " could be had for $400.00 everyday of the week- & l was buying scrap yard 1275 cc engines for $700.00 with no warranty but with most ancillaries included-

metalwright Aaron, if you want to resell me that gold finger Moke for what you paid for it from me , get ahold of me, cash waiting-

Big AL

I have recently been working on a 998. The plan was to sell the car as surplus to our needs. A pre sale compression test showed three cyls. at 180 and one cyl. at 70 psi. Follow up with a leak down test showed 10/15 percent leak on three cyls. and 70 on the last. It was not a normal leak test for me. I could hear leakage at intake, exhaust and valve cover cap. I quickly removed the head, gently tapped the retainers with a small hammer even a soft faced one will do. Removing the valves it was clear they were not sealing fully but not as bad as my leak. I made a plate, drilled and tapped it for my leak down gauge. This allowed me to check the ring leakage alone. This showed 40 percent by the rings. A valve job would not correct my problem. Would seem valves in that cyl. were at 30 percent. I sent the head out with new guides, the late style triple groove valves new, hard exhaust seats, springs, seals, retainers and keepers. On small bore heads I like to use the O/S intake valves which help raise the valve in the chamber. The hard exhaust seats will bring them up or O/S valves can be used there as well with or without the hard seats.

Not knowing where you are located no idea what machine shops charge there. I had a valve job done, strip, clean, mag. for cracks, check guides and valves, check surface. Added charges were for install 8 valve guides, install four hard exhaust seats, cut seats in Serdi 100, surface cyl. head .010 assemble with new valves, seals, springs, caps and keepers check spring pressure. This service with parts cost $515. here.  

With a 1098/1100 one would expect a 12 G 295 cyl. head. There are several valves both intake and exhaust that will work. There is a change you could reuse you valves. I don't see valve all that expensive and if stem wear or a thin valve head is present they should be replaced. I also use the Payen small bore head gasket rather than the cheaper kit gasket. 

I have noticed I'm starting to get a fair collection of cyl. heads small and big bore. I have considered having them worked for a exchange or out right sale. Steve (CTR)

I have a couple of comments.

2. There is a very good chance that the collets/keepers on the valves will not "let go" of the valve stem to allow you to compress the valve to access the seals.  If you really want to do this with the head on, feed a foot or so of clean cotton rope into each bore (one at a time), then turn the engine forward to raise the piston and push the rope into the combustion chamber.  The rope will support the valves so you can compress the springs.  Compressed air only works when the collets are not stuck.
3. That said, putting the new seals on will only improve the oil burning for a short while if the valve guides are also worn out.  Taking the head off is obviously more work but once done you will be able to clean things and correct any problems you find.

thats normal on exhaust valves just burnt carbon deposits 

Lazy?  It's messy?

You're probably right though.  It's coming off.  The video shows a bunch of white material on all sides of the valves (valve face and stem).

Why not just pull the head off? Takes about 30min and you will be able to check properly and change your seals

Yeah, I was at TDC, as far as I could tell from watching the rocker arms..  And then I would move it back and forth a bit to try to make sure they were closed well enough.

I am quite sure it was coming out the tailpipe, but I was not able to narrow it down.  Might have to try again..

Can't see the video but did you have the cylinder at TDC on the firing stroke? If you did not then the air method will not work. When you do it at TDC you can listen at the tailpipe  for leakage also the cab and oil filler cap if you get a loud hiss at tailpipe then suspect a valve same at carb. If a loud hiss is apparent at oil cap then the rings are suspect. But this method does need a bit of care as the rings will always leak a small amount so some experience is necessary.

Can you get an opinion about the condition of my valves by looking at this video?

Back story is:  Car runs pretty decent, but the compression isn't great.  I suspected my valve seals were causing oil to leak into the exhaust, and there is definitely unburned oil coming out the tailpipe...  So when I hooked compressed air to the cylinder in order to hold the valves up while I put the new seals on, I found that I couldn't get it to hold air.

So that made me think that the valves are not seating properly.  Looking at the video, it looks like the valves are in really poor shape.