Sitting at the crossroads of what choices to make for the engine. Most of us have been there, budget is a restrictor, but I've learned that the CVZ is simply not as performance based of a hull as I had originally expected. May be due to my hull prep, restoration work, or simply the base design. Most folks get low to mid 50's with the 898 package, the CVX-18s get into the upper 50's with the 260. My best so far was 64mph with a 388 ci SBC with Vortec top. So this should give you a bit of info to help decide. I actually may take the 260 from my Timi and put in the CVZ, and use the 388 in the Timi. It would probably take 500+ hp to push the CVZ into the 70's, takes a lot less to push a Timi there. Now I assume you are considering the 898 which is a SBC 305. Nothing wrong with a tear down and inspection, but I'd air up that low cylinder and determine what is causing the issue. You can even just plug the air compressor to that hole just be aware it may want to push the piston to BDC. Listen for air leakage, in the intake, exhaust, and crankcase(just listen at the oil fill). You could also go back to the leak down test, and add some oil to the cylinder, if the readings pick up, then its the ring seal. If not, likely a valve or head gasket. A bit low on a leak down is really not too pressing an issue, you could likely run for years that way.
As for going Vortec, certainly possible, but somewhat money wasted on a 305. Could probably find a decent running 5.7 Vortec engine and go down that road. You could easily gain 100hp going that way. Heck, Tim just sold his complete Merc 260 for $1000 I believe, and no one has shown up yet to get it, not sure if that deal fell through. Good time of year to find boat/engine deals. Bottom line, the 305 is a good motor, just don't expect stellar performance, if its broke, go another route. If it were me, I'd either run it as is, or tear down and inspect/clean. A gasket set for SBC are common and inexpensive. A valve job should not be that expensive for a set of stock heads, do some shopping.