Did anyone think to do a compression test or a leakdown test? This will tell you if you have a blown headgasket or not. At least you will be able to rule out a couple of things.
If you get no answers that way, then you might try hooking a hose to the motor and connecting a gate valve to the water "dump" side of the motor and with the valve covers off, slowly close the valve and see if you can see any "unauthorized" water leaks as the pressure builds in the motor. Sounded good when I thought of it.
the dog
ps. if it's reversion, your comp. and leakdown should show normal.