Is it hard to start as well? that would also point to valves, but do the carb first and see if it helps. could also be tons of carbon in the head/cyl area...
not sure about timing, if the key shears, it usually won't start and kick back at you, it's not like the cam gear can jump off the crank like a chain in a car...
if you're sure the carburetion is right on, and ignition good, pull off the head and take a look. you'll spot a burned valve pretty easily. if you don't have the tools to do a valve job, you can order a new valve and hand lap them in and do a pretty good job. you may have to get creative with a home made fixture to file the stem for clearance but it has been done many times by guys with primitive tools.