Your engine is not too bad as far as 1.9 waterboxers go.  I agree
with your mechanic.  If it feels good, keep driving it.  Drive it
into the ground, then get a low mileage replacement (or consider an
inline 4 conversion and/or Subaru).  Putting big money into a 1.9
with 165k miles that drives well is a waste of money IMHO.

Especially since the left side (2 and 4) is flaking out after just
two years of installing a new head....what if you spend $2000-$3000
on rebuilding the whole engine now it and it only lasts another year
or two?

Add 1/2 quart of Marvel Mystery Oil a few days before your next oil
change, that may quiet down the lifters and/or clean out any gunk
inside the engine which will help maintain oil pressure.

>Cylinder 4:  Compression 115, leakdown 40%
>3:  155, 30%
>2:  145, 50%
>1:  135, 30%.
>
>He didn't feel that this would cause low power or was a major concern (yet).
>He thought it may be lifter issues or fuel injector trouble.  After going
>through the archives I found at least one really knowledgeable guy who made
>reference to the same thing, so I hope Tony is on the right track.