I have a 76 2.0 with the stock fuel injection that I am bring back to life. It ran fine, but I decided to check the compression. After doing this, the car now backfires a lot while idling (every 2-5 seconds), and even more so if I dare throttle up. With the dual exhaust mufler, I note that the backfiring is coming from cylinders 1 or 2. I swapped out both plugs and wires on 1 and 2, but the problem remains. All the spark plug wires are routed to the correct cylinder.
I found that if I disconnected the spark plug wire to cylinder 4, the car would not backfire, and ran smoothly. Replacing the #4 plug and wire didn't fix the problem.
I plan to replace all the plugs, wires, distributor cap, etc, but was wondering why my testing is giving such confusing results. Bottom line - the only way I can fix the backfiring at idle is to disconnect the #4 plug wire.
Any ideas? Thanks.

do you have a sticking valve?

Edit: you didn't cross the injector wires on 3 and 4 did you?

Crossing the injector wire would have little effect. The 914 uses a batch fire system and not sequential injection. You would loose 1/2hp maybe. If you could measure it on a dyno.

My money is on a tight valve or carbon tracks in the distributor cap.

I just checked and adjusted all the valves about a week ago. They were all very close to where they should be, and only needed minor adjustment, so I don't think it would be a tight valve. The compression was consistent across all the cylinders. I assume this means that the valves are all functioning properly.
One thing I forgot to mention was that (previously and now) with all the spark plugs hooked up, I would hear a loud puffing exhaust sound on the right underside (cylinders 3 and 4) of the car, and the exhaust was quite loud. This noise remained after I adjusted the valves. When I disconnected the spark plug on #4, this puffing quit, and the exhaust noise quieted down. I am thinking this might be a loose or leaking exhaust on #4. Any ideas?

An exhaust leak will cause a backfire as it introduces air into the exhaust. But you also need some unburned fuel to cause the problem. If your ignition is retarded some fuel may not burn completely in the chamber and then burns in the exhaust. However this would occur with more than one cylinder. Sounds like you may have a bad spark going to cylinder 4 causing unburnt fuel into your exhaust. So pull the number 4 plug and see if it is wet or black. Check the resistance on the wire from one end to the other. Make sure your didn't pull off the connector. Make sure it is fully pushed into the distributor and onto the spark plug. Also as mentioned before make sure you don't have a dirty (carbon) distributor terminal (s). Check your ground also. And you stated you can hear an exhaust leak, which needs fixed.