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At least you found it before you dropped a valve. Here's what I would do. Buy a good used 2.7 case that has the timecerts/case savers done already. Then rebuild the engine using all your old parts but with a valve job. Of course you should replace anything that is really worn out but I bet most of your parts will be reusable. I saw a 2.7 case on the for sale forum from Ed Baus (sp). I did this on one of my engines and got the new case for 500 dollars. This will be much cheaper than having your case machined. I also recommend using Dilivar headstuds. I know this goes against most recommendations but mag cases have been known to have the timecerts pull out with steel studs.
You could try to just do the heads but you are taking a big risk. Of course if it doesn't work out you are only out your labor and a gasket kit.
-Andy
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72 Carrera RS replica, Spec 911 racer
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