Gunson colortune shows orange, regardless of mixture

1982 750N1, BS34s, #40 pilot with #127.5 main.

I went 1-2-3-4 with the colortune and #2 wouldn’t change to the ideal blue color regardless of the mixture - but the bike did start to run terribly and backfire once I adjusted the mix screw in to lean it out.

My best guess is that #2 either has some oil getting in or has poor compression. The valves are in spec.

One thing is that I used the colortune before balancing the carbs, which I had recently cleaned, and after tuning #2 by ear/feel I did find that the same (#2) had a higher vacuum than the others.

So, before I get into changing valve seals, are there any other possible causes I should look into?

Try leaner main and pilot jets until the correct combination is achieved.

Whatever the stock jet sizes are spec in the FSM for your 750 engine, the spec sizes are 120 mains and 37.5 pilots for an 82 KZ1100A-2 stock engine.
In my case the Vance & Hines header required only a step or two jump in jet size, if any when the rest of the motor was stock.