The 77-78 CB750 F model bikes are notorious for prematurely wearing out their valve guides.
Do the compression test dry and wet. If both these show good numbers then chances are it's valve guides.
i am leaning toward the possibility that the head gasket puked a piece near an oil passage- if so, that's normally a bad thing, right? can't have the engine going dry on top.
Wishfull thinking, I'm afraid. There are oil galleys at each end of the cylinder block the route oil to the cam, etc. There are o rings to seal the galley where they join cylinder head to the cylinder block that deteriorate with heat and time. They can let oil out of the engine, but the head gasket seals the cylinder so compression isn't lost. The o rings aren't going to leak oil past the compression seal of the head gasket.
there are a couple of spots that are already leaking around the outside, so i figured that maybe the inside of the gasket lost a bit too.
the scary part is that the dealer told me he thinks that the single cams engines have the cam chain through the middle which would make the engine a real bear to tear down without getting into a really huge project.
Avoid this dealer or any advise he offers in the future. He has no clue about how your engine is built or how it comes apart. I'm sure he'd rather sell you a new bike.
PM MReick about CB750 F2/F3 head work.
My guess is that you will have to pull the engine from the bike, remove the head and send it to him for rework. Reassemble the engine with new top end gaskets and seals, and reinstall into the bike.
Some people can do the work in a weekend or less (not counting the headwork time).
But, If you've never done that sort of thing, it can take considerably longer.
If you like the bike and like working on it, it is worth the effort and cost. If not, well....
Cheers,