Well, you have apparently dropped a cylinder, and you need to determine
whether it is due to a broken ring (my guess since you blew off the
breather hose and were spewing oil) or valves that are causing the
problem.

Have a competent mechanic do a cylinder leak down test.  This puts
compressed air into each cylinder, and whether excessive air comes out
the tailpipe or intake manifold (valves), or the crankcase oil fill tube
(rings) tells the story.

It doesn't take "running a little hot" for very long to break a ring in
an air cooled engine.  When you repair/rebuild/replace this engine make
sure all the cooling sheet metal, vanes, engine compartment sealing
gasket, and thermostat are properly installed and in good working order.

Good luck!

--
Stuart MacMillan
Seattle

'84 Vanagon Westy (Escape vehicle)
'65 MGB (Daily driver since 1969)
'74 MGB GT (Undergoing restoration)

Assisting in restoration:
'72 MGB GT (Daughter)
'64 MGB (Son)

Parts cars:
'68 & 73 MGB, '67 MGB GT