For only having that low number of miles on it the cylinders are worn or, or the rings are stuck in their grooves. With the description of the plugs I bet the rings are seized and not expanding as they should. So yes you are into pull the head and look land. You need to get the pistons out which means dropping the oil pan too and unbolting them from the crank. Number them and note the direction they are facing. Mark them somehow and keep the mark going as you clean them up. Orientation in the cylinder is important. You need to make sure the side to the left or the right is the same when you put it together as it was when you took it apart. And, That the same piston goes in the same cylinder. None of the mix and match stuff.It is blowing white smoke out the exhaust and the spark plugs have carbon diposits all over them. There is some milky stuff on the oil cap. Anyone had a similiar problem and what do you suggest I do? Cylinder head removal? Send it to a machine shop?
Once you have the pistons in hand you can determine if they are out of round, worn, scored or otherwise in need of replacing. The cylinders need to measured to figure out if they need to be bored out or not. There are wear limits on the two parts. To much wear, you get blow by and lack compression. I am thinking that unless it was really a neglected engine that a good cleaning of the rings and their grooves, get a tool for it, and you will be fine.
Maybe the speedometer bit the dust and there is really 288,000 miles on that engine. VW has that problem with the odometer part breaking the little plastic gear inside and thus no more miles registered, but the speed part is ok.
Good luck and keep us posted.