Screamin Demon,
On the valves being shorter, check to ensure the valves have the correct "keepers" on them. Though unlikely, someone could assemble them and not have the keepers "fully" engaged (i.e. you can engage 1 ring too high on the valve and still install the keeper and retainer).
Also, when you set your preload, using zero lash, plus 1 full turn, that equates to about .060 preload, so you must add this to the gap you observed - and yes, that could be enough to cause your engine to miss. Once it's back together, I'd check for vacuum leaks as well, but WD-40 won't expose them - unless it's a diesel. Try carb cleaner and save yourself the mess.
Southernman