Hi,
I agree with the other responses, you need to figure out what you've got before making any changes.
.020" from stock is very little change. .060" is usually the minimum done on the 4 cyl. TR motor to increase CR slightly, and .090" is pretty common, too. More toward the racing end of the spectrum, .120" is starting to get radical, .150" is a whole lot radical, but possible with the later (post-TR3) heads.
With radical milling, there can be concerns about making the wall or ceiling of the combustion chamber too thin at some of the coolant passages, which might lead to a collapse. And with too much milling the earlier heads (pre-TR4) can see an interference at the front, between the water pump housing and thermostat neck.
MRichlen is correct, the head measured from the face to the flange where the valve cover gasket seals should be about 3.30" tall, assuming it's never been milled at all. Any less than that dimension means some shaving has already been done. Do check this first.
Rob is correct, there is more to it than just milling the head. The process of improving the combustion chamber shape removes some material and each cyl. needs to be cc'ed to make sure they are all the same. Once the size of the "squish area" is known and added to the volume of the cylinder, CR (compression ratio) can be calculated.
Other major considerations include the deck height of the pistons you are using, not to mention the bore. Larger bore = larger volume = lower CR. This is one place where milling the head comes into play, adjusting CR back to where you want it.
The head gasket itself can be used to adjust CR a little, too. A thicker gasket (mostly available in solid copper) can be used to raise the head and reduce CR, especially useful for cyl. heads that have been over-milled in the past. On the other hand, the "factory" racing modification was to use the special, thin shim steel gasket that was available, either in conjunction with milling the head or by itself. This will increase CR (it this gasket was actually originally offered to decrease CR, i.e. for use in combination with the stock, sandwich type head gasket, intended for cars in countries where fuel quality was low and a slightly lower CR was required).
I agree with Simon that many folks try to set CR to around 9.5:1 for street cars in the U.S., to run well on widely available fuels. For comparison, Greg Solow at the The Engine Room builds TR/Morgan engines for race use that have 12.5 to even over 13:1 CR and produce up around 200 HP. But those wouldn't be much fun on the street and you'd better have access to *very* high octane fuel! To achieve these really high figures, in addition to milling the head, Greg fill welds in some of the combustion chamber effectively moving the ceiling down, a process that requires a lot of hand work and special stem-length valves.
By the way, the calculation of CR is usually done "statically", meaning simply by calculating and comparing the minimum and maximum volumes of the cylinder (Google for calculators on the Internet to help you do this, but you need to know all the volume factors, first).
However, there is also "effective" CR, perhaps a more realistic figure that is what the engine actually produces while running. "Effective" CR is effected by valve head diameter, camshaft duration and lift, and various other factors effecting gas flow in and out of the cylinder.
"Static" and "effective" are my own words here, trying to explain this. I don't know if these are truly correct terms. My point is that when using a high lift/long duration cam and bigger cyl. bores it might be possible to set "static" CR a little higher than would be otherwise practical.
So - back to your question - taking into consideration any and all modifications being made to your engine that change the volume of the combustion chamber, you need to determine what CR you are ending up with, then mill the head as needed to achieve the CR you want.
Hope this helps!
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