Right - a head gasket is typically low between adjacent cylinders.
Oil will tell you something.
This is cranking with all plugs out, yes?
With the valve cover off, put #1 cylinder on TDC until both valves are partially open. Rock it a bit both ways. If the exhaust valve is doing more than the intake (farther and longer), it's retarded. If it's about the same, the overlap is close to split, which means the cam is probably timed OK (it may be a bad choice, but not a mistake or damage).
My guess is that someone just made up "12.5:1", or that they were changed before you got it.
You should be able to see a dome that big with a bore scope through the plug hole @ TDC
