Adjust the valves and redo the compression test...
Here's a good link to help you understand and interpret vacuum readings:
Vacuum Gauge troubleshooting
I would also recommend changing the timing chain... Those old nylon coated gears on the 273/318 were junk... The nylon gets old and brittle and chips off, causing a loose chain, and can even allow the chain to jump a tooth... It will also cause your timing to jump back and forth and making it difficult to set the timing... I changed the chain on a 68 318 with 80 k miles to a double roller and gained 2 MPG it was so sloppy....
Installing a new good quality double roller timing chain and gears will make your timing more consistent and your idle smoother and vacuum reading smoother and more steady...
I've run this chain for decades in all of my engines and they hold up great... It's a true roller double roller timing chain one step above the stock 340 chain... I put one in an engine and ran it 125,000 before refreshing it up, and this chain was still in good shape... I replaced it with a new one anyway because I got it for $50 bucks back then and it was worth the piece of mind to have a new one...
Here's the chain that I use....
Edelbrock Performer-Link True Roller Timing Chain Set
Here's what the original timing chain gear can look like after 50,000 or more miles....
