Jensenman
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Your description of the smoking problem does indicate a ring, rather than a valve guide, problem. I once disassembled a Ford 2.3 which had the same complaint, on that one it turned out whoever replaced the pistons and rings snipped the end off of the 'expander' for the oil ring. If that is done, the 'rails' won't seal correctly.
If I recall correctly, somewhere along the line there were shims available to adjust the liner nip. None of the usual suppliers seem to list them, but there's a Waukesha industrial engine which shares the 3.75 bore size and liner shims are available for it. http://www.powermaxparts.com/DEMO/WA-265-A.html
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