An old method I've used on several other vehicles, but not a modern Volvo, was to add about a tea spoon of oil through the spark plug, and then do a compression test. If there is a significant rise for a short time, then generally it is worn rings, as the oil completes the seal. If there is little or no increase, then expect something much more serious, such as a burnt valve or broken ring.

PBH, I'd be interested in learning how you could tell from the sound on a blow down test. I could expect if you have air coming out the exhaust, then vales, or through the crankcase breather, rings. Explain if you can. Thanks! Checksix

2001 V70 T5 75K. 73 P1800ES 375K (now on heaven's roads after a major crash), 73 145 250,000 gone with the "X"

I don't like cold compression checks, just because the rings aren't warmed up yet, among other things.
You went from zero to 40psi. That is a good start. With the oil over full, there was probably very little circulation. I would hope that a valve that has not rotated in a while could be made to re-seat itself, but I am always an optimist :) If you find the compression going up in about a week, that would be a good sign! There has been a lot of damage to the valves and probably the lifters are clogged. You could try an engine cleaner to get out some of the sludge.
Any good mechanic will want to remove the head and put in new valves...

Klaus

I would do a leak-down. The blow-by noise should tell you if it's exhaust or intake valve or bad rings.

I would also say that 298,000 does not mean it's not worth pulling the head. The engine could easily do another 100,000.