Well, I reassembled it with all my new 7.3 rocker arms and new push rod set, started it with no valve covers again. Started harder than ever, almost like the timing is changed or something, hardly even ran at first, almost like 100rpm, had to hold the throttle open a bit to keep it running. Valve noise was going at it again, smoke just rolling out the exhaust. Finally got the motor to run on its own went around and started cracking lines. One had no effect at all, others slowed the motor down, one almost seemed like it helped though. But only after I'd closed it back off did I hear any effect, the noise started to quiet and almost went away then it came back worse than ever. I wrote it off and moved onto the rest quickly cracking and closing them and after nothing else happened sat there in wonder of what could possibly have gone on with it going away and then coming back worse.
I revved the motor just slightly to see if it smoked worse, it did. But in the middle of the throttle blip my brother and I both heard a loud BANG inside the motor, let it run a little more to see if it did it again, it did, BANG almost like a carb backfiring but it was inside the motor not in the intake or exhaust. Shortly after the chuff noise at the rate of a single valve opening and closing every second or so turned into a cuffchuffchuffchuffchuff like the valve had completely dropped (no visible signs of it though) or it was now on more than one cylinder (highly unlikely).
At this point Im afraid of running it any more. Last thing I want to do is actually blow the motor.