blowback through the card

Something is wrong. With a head off check the cam timing, the exhaust valve should be closing as the intake opens at TDC.

The problem with L-heads is that they will run with near zero valve clearances so if the valve have been lapped then clearances can now be zero or minus clearances. I have seen this when carbon up valves are cleaned up.
 
Once verify things are in time then re-gap the valves. With valve springs installed Intake should be .005 +-.001 and Exhaust should be .008 +- .001. Without valve springs installed Intake should be .007 +- .001 and the Exhaust should be .010 +- .001. If using the TDC compression adjustment method then you want the Piston 1/4" down past TDC.
 
As for ACR the camshaft uses ramp decompression grind.

Thanks to all for the replies. Timing marks have been checked and verified numerous times - I'm able to pull the ball bearing back far enough to align the pinion with the cam. Also verified using mark on #2 crank pin, so I don't believe its a timing issue. The only reason I lapped the valves was to see if the seats had dropped back - they were lapped only until both seat and valve lost their shine. Before lapping, valves had dull surface - not burnt - seats were shiny. Valves maintain 1/16 margin. The blowback through the carb throat is substantial - after a few seconds, my palm was dripping gas. Carb was also rebuilt.

Definitely sound like one cylinder not developing enough compression to produce the power stroke. I suspect the lack of valve clearances is your problem. I also think the idling problem is also related to this.
 
Side note: Many twins will run on one cylinder until loaded by such as a deck. This especially true of v-twins.

Checking the gaps at 1/4" before TDC on the compression stroke, believe it or not I get .005" and .008" on both cylinders. So I guess that eliminates a valve problem. Also checked the seats and they do not rotate. The engine is all buttoned up and as soon as we get a break in the weather I'm going to push it outside and let it run for a half hour or so just to see if this break-in period will help solve the problem.

Yes, checked both cyls. #1 misses occasionally, #2 steady. Got good spark - blue, about 1" long from cap to plug when I pulled the wires on each, so the magnetron is still good. Ran it constantly at different RPM for about 15 minutes, then i pulled the air cleaner (while running) to see if gas vapor was coming out of the carb throat - no vapor! Previously, I had been trying to run the engine without the air cleaner attached, but noticed it started and actually ran better with it on.....
I'm glad I checked, the inside of the cleaner housing was soaked with oil as well as the air filter from #1 breather tube. #1 breather only fits one way, baffle is in place - I couldn't determine if the check valve(?) was operational or not. How do I fix this?

The only problem with a leak down test is that it only tests the upper cylinder for problems. If the cylinder is tapered or out round at mid to bottom of the stoke it will not show up during the test.
 
Plus not only a worn cylinder or rings will cause excessive crankcase pressure but worn exhaust valve guides can too. I have several single cylinder L-heads were most techs would think it was a worn cylinder causing the engine to smoke to only find an exhaust valve guide worn out causing excessive crankcase pressure blowing oil thru the PVC valve into the carburetor.

Although the Briggs valve guide repair kits have a GO/NO GO gauge I have found if valve wiggles excessively side to side the guide and possibly the valve stem is worn.I have replaced numerous guides that the GO/ NO GO gauge would pass otherwise. I usually compare the exhaust side to side in reference to the intake side to side.
 
Now as replacing the valve guide I usually tap the guide and use a heavy washer, a screw, and a nut to pull the old guide as it to be casted version if the ipl is correct.Now of course the new guide in pressed into place and finished reamed. As the finish reamer it depends if the valve is 1/4 or 5/16. I don't remember which it is.