Replace the valves, springs and seals. The guides should be checked...it's a coin toss whether or not they are OK. Do the valve job as well. Just to clarify....you cannot grind the valves faces....you have to replace them. I have personally seen 550 and 750 ground valves and they are completely hammered out in less than 1,000 miles. Hammered as in the margin is reduced to a knife edge. If you replace the valves replace the threaded adjusters too. Old, pitted adjusters will ruin the stem tip in no time.
Have the head bead blasted or vapor blasted.....it's well worth the expense.
Never heard of anyone saying that valves cannot be refaced. I have been building SOHC engines for the past 30 years and always reface pitted valve faces. Yes, there is a limit to how far you can grind.
The engine in this thread is coming up to 5000 miles after a full engine build with refaced Honda valves and seats reground >>> http://www.sohc.co.uk/index.php/topic,20419.150.html
A smoking engine can be many things from piston to bore clearances, worn rings, valve guides and so on 
May 4, 1971 Honda issued Service Letter #84 titled, "Intake and Exhaust Valve Refacing - Not Recommended". The Stellite coating is only a few thou thick. The OEM valves are soft as a grape....just like the 750 intake seats.
People can do what ever they want to do.....I don't recommend it and will never do it after seeing the results. I have had plenty of Kibblewhite stainless valves ground....no problem there.
This is from Mike Nixon's site:
"Item: Refacing Honda valves
The valve's sealing area is its angled face. This precious, precisely-made surface is reasonably tough, but over time it gets pretty beat up. Spring tension, combustion's forces, and the camshaft's relentless pounding -- all combine to wear this face, eventually producing on it a ridge or ring, the imprint of the cylinder head's valve seat. This classic valve wear is called recession, because the valve actually gradually withdraws into the cylinder head. Normally, recession happens very slowly. In our grandfathers' day 30,000 miles was common. And it was easily corrected. The valve was removed from the engine and its ridge ground out on a special machine that had a super-smooth grinding wheel. You might be familiar with this.
But 70s and 80s vintage Japanese bikes are unique. You don't grind their valves, and recession on them is a whole 'nother story. On May 4, 1971 Honda issued Service Letter #84 titled, "Intake and Exhaust Valve Refacing - Not Recommended". The bulletin heralded a sea change about to sweep the Japanese segment of the motorcycle industry. The backstory was that no longer would Japanese makers' valves be made the traditional way, of two pieces welded together, the valve's head of a material optimized for its role and the valve's stem similarly of a unique metal. From this point on, the valve would be a one-piece forging, and a new thing, a thin plasma coating called Stellite, would be added to the valve for durability. The bulletin's succinct message was that due to this coating, and in a departure from standard automotive practice, this new-age valve could not be refaced during an engine rebuild. Replacement was now the only option.
However, it soon became painfully obvious that these new valves were astonishingly soft. By 15,000 miles and in many cases (such as in early 80s Kawasakis) sooner, they were badly receded, i.e. their sealing faces ridged -- despite the Stellite -- and had consequently lost sealing ability. This prevailed for many years. In fact it wasn't until almost 1990 that Honda and the other Japanese manufacturers would catch up to the issue. Thus for a model range of almost 20 years, Big Four bikes suffer the curse of soft, fast-wearing, throw-away valves, and all of these engines exhibit abnormally (and often seriously) low cylinder compression as a result.
In fact, low compression is the first and most significant practical consequence of these cheaply-made valves. All vintage Japanese engines, unless the valves have been replaced recently, need a valve job. All of them. The symptom is significantly low compression, typically a loss of more than 35 percent. Instead of 170 psi they exhibit just 110 to 130. Proper tuning of these engines is very problematic until they are repaired.
An added consequence of unusually fast valve recession is the valve moves steadily upward toward its tappet, reducing precious clearance. This further reduces compression and more importantly, also reduces valve cooling, leading quickly to burnt valves. In many engines, recession happens so fast the rider is aware of it only when discovering serious engine damage.
A third problem is ignorance. Many mechanics persist in refacing these valves. That is, grinding the valve's sealing face as was common until the 1970s. But removing a Big Four manufacturer's valve's special coating can cause it to quickly be heat damaged and will certainly increase its already rapid recession rate. The correct way to handle receded valves is to replace them. Some folks default to lapping the valve, that is, rubbing the valve against its seat with an abrasive paste in-between. Though countenanced by some manufacturers, lapping is a hack procedure. It does not address recession, but instead makes recession worse. At most consider lapping a "get it home" effort and no more than that. "
