Yup, more than likely a BHG. Get you cyl head milled, valves replaced and new seals. I think the backfire problem is an incorrecltly setting valve. BHG are so common, I wouldn't hesitate to blame it on that. It's toyota's main weakness, they didn't torque the head bolts correctly.
These are really good cars, once you get this problem fixed you should be kosher for a good amount of time. Looking at the stock internals, they are built solid, these motors are designed to hold a lot of boost and last a long time, the freaking gaskets don't last like they should though.
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