I had a mate's RB VL do the same to a plug once, the piece put a hundred small dents in the piston and head.
We opened it up, replaced the gasket, made sure the crap was gone and put it back together. It ran good ever since as far as I know.
I think that if you are down on Compression, you should whip the head off and inspect the valves and valve seats for damage, also inspect the bore for scoring.
Actually, maybe a leak-down test first may answer some questions.