Head gasket. "Little hot" translates to thermonuclear overheat. The little darlings will NOT pull it over to the side of the road when it gets hot, so the head warps and the gasket seal blows. My wife was one of the "little darlings". It is not politically expedient to bring this up, however. Just bite the bullet and fix it....

Note that compression pressure alone is probably above the regualtor limit on your air compressor, not to mention the much higher combustion pressure on top of that. A more reliable test is one for combustion products in the coolant. Lisle makes a kit for this (p/# 75100, I think) for about $50, available at parts stores. You will probably also see coolant loss in the rad/overflow.

I paid $400 for a complete rebuild on my heads, and another $450 for a head gasket set, all new water hoses, new water pump, all new belts, and all new acc. and timing belt idler pulleys. I did the labor. 3 hours of teardown, 2 hours of block deck cleaning and gasket scraping (and that's NOT excessive), and 6 hours of put back.