I found this same problem on my just completed '88 4.0 rebuild. If we set the timing gear marks pointing towards each other, the valves were not relaxed for cylinder 1. Rotated the engine one revolution, and all was fine, with the cam sprocket mark now pointing away from the crank. So, I scribed a new mark on the cam sprocket tooth that was now pointing at the crank sprocket mark. We used this as our starting point, and during the install kept a track of the number of turns on the engine while bolting to the torque converter. When we were back around to my starting point, primed the pump, dropped in the dist, and she fired right up!
If I had set it all up according to the original mark on the cam sprocket, we would still be going through the same thing as the OP.
Why would someone design the cam timing marks to be 180 deg off of the cylinder one firing point? It would make one less thing to worry about when rebuilding one of these engines. I had the luxury of seeing all of this on a stand, no valve cover on. But for someone replacing just the timing set, in the vehicle, it can mess with your mind if you're short on patience...
By the way, one week, 60 mile, so far so good! It is nice to have power again, and no more embarrassing knocking and tapping echoing off the cars next to me....
