What does the book say a stock 5.3L engine should have? Cold cranking compression of a stock 10:1 engine of this size in a n average atmosphere of 14.7 should create just less than 150psi. This would mean that you may not recognize a very big difference in less than 25psi decrease.
What were the other cylinders at, and are you getting other symptoms of a tired engine?
Oil fouling that cylinder?
Lots of oil consumption?
I doubt any of these are actually happening, and you troubles are elsewhere.
That misfire code could be a number of things, and may not be related to low compression. Heak, a small intakeleak could be the real problem, as could a dirty injector.
I have been messing around with a toyota that is randomly mis-firing. Turned out to be a bad set of plugs.
I would start by verifying that the vehicle is tuned correctly, and eliminate the simple stuff before, I got to excited about re-building a short block.
By the way, I might be a little concerned if a mechaninc was actually willing to
re-build one cylinder in a V8 engine.
You gotta find the real problem.