After takeoff the airplane climbed to about 50 feet AGL and the plt attempted to accelerate twice by lowering the nose, losing altitude each time. The airplane then banked right before flying into trees about 1,500 feet from the end of the runway. Impact occurred in a residential backyard. The passenger escaped but was unable to rescue the pilot before fire consumed the cabin. An engine run was successful but failed to attain air flow and RPM test points. Disassembly revealed corrosion throughout indicating that the engine had been inactive for extended periods of time. There was also evidence of multiple worn components and metal contamination. Compression on cylinders 1-4 was 65/80, 75/80, and 69/80 respectively. Left magneto timing was 24.5 degrees BTC vice the correct timing of 20 degrees BTC. An annual inspection was performed on 4/5/90. The engine was not capable of producing rated power due to mechanical inefficiency and wear limits being exceeded.