A "bitch slap" of reality really sucks to receive but sometimes......the actual truth will save you a lot of trouble down the line.
Pnora above may be right, he may not. The lifter valley does look dirty though. All that crud does fall in and land in the oil pan. From there, there is a suction pipe with what looks sort of like a shower head on the end. That is the "oil pickup" and it draws in oil to send it throughout the engine. The problem is, when crud falls into the pan, it sometimes gets into the oil pickup and
blocks oil flow. That is bad.
The 318 engines can be made to run strong but you have to know the limitations. They were built with really low lift camshafts and soft valvesprings. They also had small valves in the heads until 1985 or so. Think about the intended applications the 318 was used for: Basic transportation with a huge priority of reliability. My opinion....the 318 was the Mopar version of the Honda civic 1.5 or the Toyota 22R. The 318 will run and run a long time but they are not a performance engine when they are kept stock.
A 340 cam with matching valvesprings AND a decent set of heads will really wake up a 318. The 340 from 68-71 was "rated" at 275 HP while the same 318 was closer to 150 HP.
If the car were mine, because I LOVE to save and rescue things.....I'd pull the oil pan. Clean out the lifter valley of all loose debris. Clean the oil pickup if it has any stuff blocking the screen. Reinstall the oil pan using
Superformance gaskets and
The Right Stuff sealant.
The cam may look dirty but still be okay. You can pull out one lifter at a time. Any lifter that looks like THIS is bad:
View attachment 1306202
That bowl like dish you see indicates a failed lifter and surely the cam lobe it was riding on. All it takes is ONE lobe to go bad to warrant a cam and lifter replacement. This is a big job for a new enthusiast. I'd strongly suggest you find a friend that knows engines well enough to help you out. There are so many small details to know, it can be difficult to walk you though all of it from here.
If all the lifters look like these....
View attachment 1306204
Flat across the bottom, your cam might be fine. Lifters actually have a very slight dome to them...we call it
crown.
When running, the lifters
have to spin to protect themselves and the cam lobes. A lifter that does not spin will soon wear out the bottom and the cam lobe too.