Sound can radiate and echo within the engine compartment. The noise may sound as if it's coming from the rear manifold area but originate in the lower end of the engine. The sound gets amplified as it travels upward between the engine and firewall. If a bearing spun the tabs on the halves will no longer hold it in place. One of the halves can actually come out of the rod and the piston will hit the head on the upstroke making it sound like the problem is in the upper half of the engine.

 

I really hope its not a rod bearing. Either way I'm garaging my baby for the winter and hopefully fixing the lifter (or whatever it is) and continuing with the future mods that await. Thanks for the opinions and suggestions and all the help!