I've never opened the oil stick when running till I did this one. I've seen engines like the Intek's, that is one trick to find a blown head gasket. I'm running Wallys World Supertech 30w in all my mowers. This is a splasher engine.When you remove the oil dipstick the oil slinger will spray oil and air out the tube. (assuming a splash lube motor) Compression is probably ok. What oil are you using the engine?
slomo