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Looks like your on the right track...if you want to you could replace the cam and lifter...the place i get my car parts from was able to get a crane cam and lifters for a chevy small block for like $150 for the whole kit....also double check your harmonic balancer..mine on my mustang was scary looking..the rubber between the outer and inner part was all dry rotted...i didn't trust it one bit.
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