i agree with crassius about the lower seals being gone. i check with brake cleaner myself. if there is a leak, the engine dies completely. i found that wd40 only bubbles.
as for the head and "burnt" piston, are you sure its burnt? or is it just excess oil?? possibly to high of a fuel/oil mix?
also, did u lap the head/cylinder?? if not, i suggest it. creates a better seal.