If you have double checked to make sure that the Glow plug is tight then yes the sleeve has worn allowing all the compression to pass by the piston. what kind of engine 3.3? 2.5?
IMO, I'd get a whole new 2.5 for about 90 bucks or a 3.3 for 105 on ebay. It's usually not worth rebuilding because you either have to buy a connecting rod or re-use the worn one. Plus the bearings have all that use on them and you might end up with a blown pile of parts by the time it's broken in again.....just my opinion of course.