weak cylinder...now what?

I found 7 nice looking plugs after about a year in the car except for cylinder #8 which was carbon foulded in between electrodes and also wet with oil.

Was this a wire? Does it make sense that I have bad rings or valves seats in one cylinder? :(

I'm thinking I should beat on this engine for a coupleof years and pop in a crate motor...over reacting?
 
For starters you can enter the KOER test. At the end of that test you can do the cylinder balance test to see if it's something serious. Before you do that you should throw on a new plug and wire (if you have spares laying around)

When you drive do you notice any smoke?

How does the car run? Does it run like it's missing a cylinder?
 
So did you change the plugs / wires? Or at least replace the plug and wire on cylinder #8? If it's running on all 8 now you'll probably want to drive the carbon build up out of it.
 
Cylinder balance test:
Warm the car's engine up to normal operating temperature. Use a jumper wire or paper clip to put the computer into test mode. Start the engine and let it go through the normal diagnostic tests, then quickly press the throttle to the floor. The engine RPM should exceed 2500 RPM's for a brief second. The engine RPM's will increase to about 1450-1600 RPM and hold steady. The engine will shut off power to each injector, one at a time. When it has sequenced through all 8 injectors, it will flash 99 for everything OK, or the number of the failing cylinder such as 22 for cylinder #2. Quickly pressing the throttle again up to 2500 RPM’s will cause the test to re-run with smaller qualifying figures. Do it a third time, and if the same cylinder shows up, the cylinder is weak and isn’t putting out power like it should. See the Chilton’s Shop manual for the complete test procedure

Here's the link to dump the computer codes with only a jumper wire or paper clip and the check engine light, or test light or voltmeter. I’ve used it for years, and it works great.

See http://www.troublecodes.net/Ford/
OR
See http://www.dalidesign.com/hbook/eectest.html for more descriptive help
OR
See http://www.mustangworks.com/articles/electronics/eec-iv_codes.html

For those who are intimidated by all the wires & connections, see http://www.actron.com/product_detail.php?pid=16153 for what a typical hand scanner looks like. Normal retail price is about $30 or so at Walmart.

Or for a nicer scanner see http://www.midwayautosupply.com/detailedproductdescription.asp?3829 – It has a 3 digit LCD display so that you don’t have to count flashes or beeps.. Cost is $33.