My '66 has an engine in it of questionable lineage. 

At any rate, compression in #3 is very low, like 50, where all the others
are pretty reasonable, around 95 - 105.
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Well, time for ye olde engine rebuild.   But, now much does it need?   

1 - check end play after removing engine and before removing flywheel.

2- your heads prolly need to be rebuilt/replaced.  Take them to your friendly
vw/machine shop for inspection

3- check ps and pc for wear as per Muir. 

4  new rod bearings

5 ? bottom end stuff ?  (end play is related)

6 -  new push rod, main & oil cooler seals 

dont assume the problem lies merely in that one head.  and Yes they are
always replaced/rebuildt in pairs.  
 If in doubt, check at your local friendly vw shop.

my two cents,  

clara