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Burnt exhaust valve in a Continental aircraft engine
Hole burned through edge of exhaust valve from the red-hot gas. Notice the cylinder is oily. Once the exhaust valve is breached the engine starts pumping oil. Burning like this is rare. Typically pieces of valve break-off. Notice the change in coloration across the valve. Coloration changes can be used to visually detect leaks.

In this picture the burn area is located next to the cylinder wall I'm wondering if it might be caused by detonation. This is what causes the piston to burn right at the edge. Pressure waves bounce off the cylinder wall and scrape-off the protective layer of air on the piston (in this case valve). Now the valve is exposed to the hot exhaust gas and gets red-hot. Once it is red hot it causes preignition and is self-sustaining. You now have a  Chernobyl Event.
Burned edge of exhaust valve
Here we see the uneven coloration across the exhaust valve. The edges shown by the black lines are where the valve face got hot enough to burn the deposits from the surface. This is a sign of valve leakage.
Lycoming exhaust valve showing leakage
This is what a leaking exhaust valve looks like from the sealing surface side. Notice the slight color change (shown by black line). Sealing face looks a little ragged also.

Once the valve starts leaking then it starts to get hot. So hot that the metal starts to melt or crack. The valve stem also gets hot and may start to stick in the guide.
Broken Lycoming exhaust valve
Close-up of exhaust valve face showing crack. Notice also the rough and distorted surface. The valve face is a circle. Heat it in one area and the metal in that area thermally expands. This causes a stress called "Hoop Stress".
Hoop stress in liberty bell
Notice the similar appearance in the cracked valve face and the crack in the Liberty Bell. Both are caused by Hoop Stress. Uneven stress around the circumference creates tension that cracks the part along the axis.
Now here is the danger. When these cracks grow so long they turn sideways and connect with other cracks. When this happens a chunk of valve breaks off.

Not only do you lose power (in a turbocharged engine you're coming down whether you want to or not) but the chunk of metal pounds around inside your engine. This is the part that I always had a hard time convincing mechanics. I would always ask the mechanic "where did the pieces go?" The reply was "out the exhaust".

Wrong answer. They get sucked up the intake and travel from cylinder to cylinder causing damage. During idle when the intake valve opens there is some back-flow into the intake system. The chunk can get sucked into the intake.
If the seat were aligned concentric with the guide, then the seat width would be even around the entire circumference. The difference in width is the amount that the seat and guide are out of alignment. A valve placed on a seat that has uneven width will eventually leak.

A stone is used to grind the 30 degree seat face onto the seat. The stone is piloted from the guide. The reason the seat width is not even is that the stone did more grinding on the left side than the right. This is because the stone was forced to the left by the pilot. Stone pressure is more on the left than on the right.

When the valve is placed into the guide and closes onto the seat it is just like the stone. More pressure on one side than the other. This uneven pressure creates guide wear and makes for a poor sealing surface.

In this case the fix is to move the seat over to the left so that the seat and guide are concentric (center axis of guide is same location as center axis of seat). How do you do this? Not with hand tools. You need to move the holes. The only way you can move a hole is to make it larger and to pilot from either the seat or the guide. This takes good equipment that is not in every shop.
Continental 520 cylinder head
Typically the guide wears and no longer holds the valve in position. The valve closes unevenly onto the seat face. Guide wear can be normal as the engine gets older or it can occur very quickly. It is always a good idea to check alignments to make sure that the seat, guide, valve, rocker arm face, rocker shaft bushings are all aligned properly so that there is no side-loading on the valve stem against the guide.

How would one check all of these alignments. Easy, make sure the rocker arm face sits flat against the top of the valve stem. If anything is out of alignment, then the rocker / valve contact will not be parallel.
cross-section of Lycoming cylinder showing exhaust valve
This is what the valve system looks like in a Lycoming engine. All of the hot exhaust gas flows past the seat face. Much of this heat flows from the valve face and into the seat face. From here it travels to the fins and into the atmosphere. A leaking valve face interrupts the flow of heat out of the valve. As the valve temperatures increase all kinds of nasty things happen:
1. valve breaks
2. valve sticks
3. valve gets red hot and causes detonation (see first picture above)

The failed valve is fun to look at but it is the seat and guide that tells the story. Valves leak for two common reasons:

1. Worn guide
2. Poorly machined seat.

There are other reasons of course (like a sticky valve) but these two reasons cover about 90%.

Take a good look at this seat. What a poor job of machining. Any valve would leak sitting on this seat. How do I know? Look carefully at the top of the seat where the black lines end. Notice the width of the top surface. It is wider on the right and very narrow on the left. There are other things to look at but they can be ignored for most examinations.

This is what a "hemi" (hemispherical) cylinder looks like. Dome topped rather than flat topped. Notice spark plug on top is pointed to the right or towards the exhaust valve. This is to burn the gasses quickly in the hot exhaust valve area first. Provides preignition resistance. All is for naute if the valve gets red hot because it is leaking.
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