^^^^^
Tim, I am glad you revisited this. You've had a chance to air some grievances and I/we have had our 'say' about it. So let's just move forward and start anew.
Piston ring failure or extreme wear IS one avenue for pressurized air (during testing) to show up in the crankcase. But a blown head-gasket (to oil galley) is another.
So we turn to the 'liklihood' of each and consider the history and design of the engine. A significantly overheated 1FZ-FE is famous for a blown head gasket (particularly if the original) and much lesser known for piston ring failure. Common practice here is to simply remove the head and carefully inspect the head gasket (failure points will be obvious) and observe the condition of the cylinders. Cracked/Warped heads are not unknown as well.
The amount of pressure loss demonstrated in your video suggests a severe leak. The 1FZ-FE piston has 3 sets of rings, has oil nozzles that squirt oil on the underside of the pistons, a significant oil cooler and IF maintained in any fashion at all will generally not exhibit cylinder wear or ring damage.
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BUT....overheating is whole 'nother thing. So....we ask ourselves what are the chances that only ONE cylinder suffered broken rings vs. the head gasket leaking at that location? To lose as much pressure as you did past the rings....all three sets would have had to been severely worn or broken. There is always a small amount of 'blow by', in fact it is by design. The cylinder pressure presses down on each ring set (during the power stroke) and aids in sealing. The ring gaps are staggered only to create a 'maze' for the pressurized gases to negotiate. It attenuates the travel (in time) and thus helps create the ring seal. In a static setting such as your test we might expect more air to get past the rings....but not as much as you saw UNLESS they were severely compromised.
With all of that in mind....I am NOT saying it couldn't be the rings, I am just saying it is less likely than a head gasket.
Also, in the future...if you suspect pressure into the crankcase, just remove the oil fill cap and listen right there.
As for the Engine Rebuilder.....if you take him an engine with the preconceived notion that is has a bad cylinder/rings, what do you think he is going to recommend? A rebuild of course.
In the end....it just comes down to what the owner wants to achieve. IF the owner plans to keep the vehicle, has the money for a rebuild....then sure, go ahead and have it done. But if the owner finds that the issue is actually the head gasket and it is determined that the lower end, cylinders and rings are all OK, then reconditioning the head and new head gasket will put him back on track for a few hundred thousand miles more service.
Thank you for your input I hope you will choose to stick around.
Flint.