You don't need to put oil down the cylinders - thats just a secondary test if compression is poor to see if its rings or valves. If you add a little oil & compression improves then its rings that are the culprit, if no improvement then its valves.
Ref your way of testing.
I think you did it a bit wrong. If you did not hold the throttle wide open you wont see good compression.
To test properly engine ought to be warm with all plugs removed. Disconnect + side of coil to avoid engine starting. Fix throttle wide open (foot to floor) by wedging something on throttle pedal etc.
Then turn engine on starter for a few turns until whoever is looking at guage sees no further increase in reading - usually 2-3 seconds is enough.
With a V8 you may see a drop on the last few cylinders as the battery will be getting tired.
As I said before, 10% variation across all cylinders is ok, your readings above are not too bad but cylinder 5 is a lot higher which is not a bad thing in itself, but possibly shows the others are not so good.
I would retest again following what is written above and see what the results are.
Good news on the increase in power, you might still need to adjust the carburettor to get more power, which may mean you can get more advance without pinking. Do you know what the timing is now you have backed it off to avoid pinking?