ok....de-smog should not affect water temp, and shouldn't cause loss of power. Compression refers to the amount of pressure the cylinders can make and is an indicator of valve and ring condition and isn't something that is gained or lost without some major work. these are alot different than an air cooled engine, but only in the fact that this thing also has a watering system, which is a closed loop, pressurized, thermostatically controlled cooling system. there's a water pump on the front of the block being driven by a belt or a pair of belts. it circulates water thru the engine in a loop till the water gets to 180 or 190 and then the stat opens and allows the hot water to leave the block and go to the radiator thru the upper hose. basically, the water gets hot, stat opens, new water comes in from bottom hose to water pump and into block, stat closes, water in block circulates, water in radiator cools down, stat opens, loop happens again. there has to be a time where the hot water can sit in the radiator and be cooled by the engine fan(fan clutch, we'll get to that later). If the water can't sit in the block and cool, you get into a nasty heating cycle that only stops its climb when you lay off the gas and are able to just cruise and not create the extra heat load. water can bypass the thermostat and cause the runaway if the stat is bad, the o ring on the top of the stat is bad or missing, the gasket below the stat is bad, or the heater hoses are bypassed incorrectly. If the fan clutch between the water pump and fan is bad, the fan won't spin with the gusto it needs to keep up with the engines heat generation. it is an oil filled affair that locks up upon a temperature rise, provided the oil is still viscous. Now, another thing that can cause over heating that is cooling related are the conditions of the heater cores, the radiator core the radiator cap and the water pump itself. if the pump is bad, or any of the cores are blocked- even partially, water won't flo thru the motor except thru thermal convection which will cause engine hot spots and subsequent overtemps. if the cap is bad, or the cores have air leaks, or there are bad hoses or clamps, you'll boil at 200 instead of 250 due to atmospheric pressure rather than 14 psi or whatever the cap is supposed to be.
that is water cooling basics tech.
other things that can cause over heating AND loss of power, is a bad intake leak, or very lean condition, or a very advanced spark. de-smogging can be dangerous in that, one can create undesirable conditions for combustion engines if done incorrectly. You should start by starting it up from cold and carefully look for vacuum/intake leaks with a can of carb cleaner. short burst at the carb base wait a second or three to see if the idle changes. shot at the intake front top wait listen> and so on. be careful with the flamethrower spray tho and when it gets hot, quit. Find the vacuum leak and isolate it. Could be badly routed vacuum hoses. use the search function to go thru all the de-smog threads to see how yours should be and make it right. make sure your timing is set not too high...post pics of what's under your hood
Maybe....
)... Was only trying to say you need more detailed posts if you want detailed answers. Unless Lambcrusher reads it, and can divine what what one is actually asking 
helps with mine 
