Wait for a second opinion but in my experience (which is limited) blow-by is the term given to the compression lost via piston failure or piston ring degradation. I think the valve sleeves (if the valve stems are worn excessively) could also be a port of compression loss too.

With regard to the back-firing, this could simply be the timing? Perhaps get everything timed nicely and then adjust your tappets to the specified gaps. This may help.