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My engine is underpowered even by 914-4 standards, low compression one cylinder, bad clutch and back oil leak. So dropped the engine. Now what? Any suggestions on how to find out if its bad head vs cylinder? plan to replace pushrod tube seals and clutch as well as SS exhaust. anything else I should do? Thanks in advance.

What size is it? Miles? Recent rebuilds?

If you have it on the ground it is hard not to consider new rings and a valve job. But of course your budget dictates what to consider. A good machine shop can check your heads and see how much work they need. Unless you have obviously damaged pistons or jugs, that might be all you need. But a check of the tolerances for the lower may tell you if you need to go deeper or just to do the top.

I am sure you will get some more specific guidance from others but that is kind of the most basic approach.

How about rebuilding the heads, honing the cylinders, new rings, powdercoating the cooling tin and induction parts, cleaning the short block, assembling, installing and driving? Driving season is upon us and the last thing I'd want is my 914 up on jackstands.

You can also just look for another running engine here. They pop up all the time on here from cars being upgraded to sixes. Keep your eyes open and you could find a nice 2.0.

If you take the heads off, do a "spirits test". Pour paint thinner in them and see if the valves leak. If they do, you can take the valve out (need a valve spring compressor) and see if you burned one from your valves being tight/held open. A good valve will have shiny ring around the edge where it seats. A burned one won't have that. Chances are you find a burned valve on the cylinder that is low.