Briggs 21 HP Single Cylinder. Bad rings?

Just got this Craftsman mower for free. Nothing is free.....
Engine: Model 331877, Type 1371 B1, Code 100405ZD
Started right up after I cleaned the totally fouled plug.
Burns oil blue smoke.
Has 60 psi compression.
But runs pretty well.
Just wanted to get a second opinion that there's no way this is a valve seal oil leak.
The cylinder looks great except for that stain (see photo) where I think some dirty oil sat for a couple years. It's a horizontal cylinder so that is where any fluid would pool. The stain feels as smooth as the rest of the cylinder.
Spark plug and intake valve all oil crusted. (see photo).
Would an intake valve have this much crusted on on the top side of the valve if it was an oil leak through the rings?
I don't see oil leaking down the valve stem.
Also it blows a lot out of the dip stick hole.
Exhaust valve stem is flat black and dry. (That photo won't load)
 
Ok, it's obviously bad rings, but I'm still open to somebody else saying Duh!
 
If I replace the rings, do I need to clean up that stain even if you can't feel it there?
 
Thanks
:)