Is my engine shot?

I dealt with the same problem. I had misfires on cylinder #3 which was P0303. I had burned valves. Your highest reading for your compression was 150 which is good. Your lowest compression reading should be no lower than 25% of your highest reading. So your lowest cylinder would have to be a minimum of 113, which is 25% of 150. So you have a low cylinder.
A misfire can result from either bad piston rings, burned valves, blown head gasket, bad iginition coil or a faulty fuel injector, or even a hole in a piston. Usually you would see from your engine codes which cylinder had the misifre as you have already found out. Then you would move your spark plugs to a different cylinder and also switch your coil packs around to different cylinders to see if the misfire moved to another cylinder. That you tell you if it was a coil pack or a spark plug.
If the engine isn't overheating, smoking out the tailpipe , have water in the oil or oil in the antifreeze you can probably rule out a head gasket. I would put a few teaspoons of oil in the low cylinder with 90 pounds and retake the comression reading. If the reading comes up your have a piston ring issue because the oil temporarily seals the rings. If it doesn't come up you probably have a burned valve.
Chances are very very slim it is a bad fuel injector. A bad injector will cause the engine to spark knock severely if it is not sprying enough fuel or if it was not spraying properly or too much you would have black sooty deposits on the spark plug for that cylinder.
At any rate to remove the head and get new valves installed and the shim bucket set back up for the proper valve clearance is a costly endeavor. I did the head removal and reinstall myself because I am a mechanic, but just the parts alone for gaskets, new valves and guides cost me around $600. Then the machine shop fee for doing the valve work and shim buckets was close to $300. Then you still need to change the oil. Also if you are going that deep into the engine you might as well replace the timing chain and possibly gears and tensioners.
So it is a very costly thing to do or have done. I wish I had better news for you. There are threads here on getting the head off. What makes a burned valve an even bigger headache on a Smart is you only have 3 cylinders to begin with. When the computer detects a misfire from a cylinder it will shut off the fuel injector to that cylinder so that the cylinder isn't dumping raw fuel into the exhaust. So you are running on 2 cylinders then. When you shut it down and restart it may fire that cylinder again until it detetcts another misfire, then it's the same thing all over again. DCO

I don't know if undersize pistons are available for the engine. And probably stroker cranks are non existent. the Mitsubishi "I" used the same 3b21 engine and they made the "I" with a much larger access panel to get at the engine. The engine is so small I guess they just planned on it being a throw away engine. They are already running 10 to 1 compression. I read somewhere that the enigne only weighs 125 pounds. But they wrung alot of power out of a small engine. 70 horsepower isn't much but that is a small engine in the motorcycle range of displacement. If one could find beefier rods and could flash the ECU to remove the rev limiter, then port and polish the heads, then slightly larger fuel injectors and aftermarket exhaust, I'm sure you could get a few more horsepower out of it. Somewhere here on the forum I remember someone stating that the 3B21 engine would hold together for up to 125 horsepower or something like that, can't remember for sure. So many people just have a stigma against a 3 cylinder engine. If I could afford a turbo kit I would be happy with the acceleration. Max handles great and rides better with my mods. It has always stopped well. If I could just increase the horsepower by 30 percent up to around a 100 it would perform so much better on interstate. We have some pretty hefty hills here in WV. DCO