Ok, just got back from an extended work trip down to the States and am back to tinkering with my FJ40. When I left the state, I had a new head and manifold gasket ordered and a valve job done on my head and ready to be reinstalled. Upon returning home, I installed both the new head gasket and the manifold gasket and after bolting everything back to torque I did a compression test.
The compression numbers were horrendous!! (5-25psi) I could hear pressure escaping into the crank case from several of the cylinders after cranking. I then squirted some WD-40 into the cylinders thru the spark plug hole and redid the test. Still pretty bad (75-90psi. I then squirted some leftover gear oil (from the tranny

into the cylinders and cranked again. Boom! Good compression finally! (130-145psi for most and 165psi on cylinder #5)
Now that my compression numbers are much better I know the valve job I did worked. Not sure why the rings were leaking so badly, but they really haven't had time to set into the honed cylinders yet and were left for a month without oil...

Anyways, it runs far better with much more power and torque. I can creep the vehicle forward or backwards now without touching the gas whereas before it would almost instantly stall without high RPMs, and would burn the clutch plate.
It starts decently now when the engine is cold. 2 pumps of the gas pedal, full choke and a few seconds of cranking and it fires up. Sluggish, but it starts. Seems to prefer less than full choke since it seems to be bogged down when first starting until I go to half choke and it smooths out.
But... Hot starts are another matter. After running for 20-30 minutes and shutting the engine off. It is nearly impossible to restart. Starter cranks fine. Engine spins fine. It sputters but won't fire. I've tried the FSM hot start procedure, but it doesnt help. It's definitely heavily gassed and likely flooded from the smell, but the hot start procedure should fix that, so it's confusing. I'm wondering if it's an ignition issue that only rears its ugly head on a warm engine?
After 45 minutes I can give it two pumps, full choke and 5 seconds later it starts right up.