After getting this old Craftsman/Roper GT18 finally running, another issue could put a halt to this project. The engine is a B&S 18hp flat headed twin cylinder. Model number is 422437. Oil is being pushed out violently (with great force) from the two breather tubes into the air cleaner housing. A lot of oil will accumulate and get sucked into the air horn of the carburator, causing heavy blue smoking. Engine has to be halfway choked to run properly. I measured compression at 100 psi from both cylinders. Is it possible to get all this blowby even when compression appears good?

Yes it's possible and it sounds like your problem...
 
if the block isn't worn badly, (likely not), a re-ring (with a flat head) is fairly easy to do.
Of course, re-hone the cylinder.  
 
 
.