I might be way off base here, but is there a chance that the entire bottom end is filled up with fuel? The piston might still move freely over most of the stroke, but could be encountering a hydraulic lock near the bottom. This would also prevent the engine from running at all.
Hydro-lock can be very strong; strong enough to pop the dome off of the piston like a bottlecap, if the engine is running. Customer had this happen on a T-500 once.. gas was pouring out of the carb, cylinder was dead, and they kept driving it till the piston flew apart.