I agree, it sounds rather high. At 127 psi, did it run well? I.e. did it have reasonable power output or was it "tired"?
If valves and rings are ok I'd guess you may have a blown head gasket (it may sometimes be hard to spot) or a warped head. Use a straight ruler on the head to cylinder mating surface with a light shining from behind. Move the ruler around. You should not see any light between ruler and head.
A general rule for increasing engine volume: increase stroke or bore and keeping the head volume intact will increase compression ratio. This may lead to knocking. You will also want to check the geometry of the head volume to control squish and any imperfections that increase risk of knocking.
One way to lower compression ratio, by increasing head volume, is to use a thicker head gasket but it's only advisable if the head is hemispherical. Again check squish.
If the head is straight I'd use it for a BBK.