Glad to hear you isolated the problem Tommy,
This is one of the problems with on-line (Internet) diagnostics. We can't see/touch or hear the problematic equipment. All we have to work with is what the poster explains (which you explained well) but on larger post as your's some details tend to get over looked.
The fact that you said you had rebuilt many 4 cycle engines lead me/us to believe you had basic knowledge of the functions/operations and knew that most lawn and garden equipment small engine valves are adjusted on compression stroke, Our bad....
Also, There are some that do not know of the 1/4" past TDC on some engines to get past the compression release to obtain a proper valve clearance adjustment.
A mechanical compression release is nothing "new" to lawn and garden equipment engines, Kohler introduced this fetcher back in the late 40's with the introduction of the K-Series engine line.
The first cam picture I posted is from a Kohler K301, I knew that one showed in greater detail the compression release mechanism and I could blow it up without much distortion.
Enough of that.....
There is a process of elimination one should follow when doing diagnostics. That's starting with the easiest probable causes first. Myself had rather remove 3 or 4 screws and check valve clearance first (since spit-back/backfire through valves in 'most' cases is found to be valve related) than remove the whole top of the engine to check the key.
So, It looks like the valve assumption was invalid in your
case but very well could have been reversed, Pull the flywheel and find nothing wrong then check valve Clarence.
In any event; Glad you found the problem and don't be a stranger, We all really try to give each other a hand the best we can......
No pun intended,
But....At times....I would give anything to get my hands on the engineers that design some of this equipment.