On August 24, 2003, approximately 1127 Pacific daylight time, a Mooney M20D, N6619U, registered to/operated by a commercial pilot, and being flown by a private pilot, sustained substantial damage during a partial loss of power and in-flight collision with trees and terrain during the initial climb following takeoff from Hood River Airport, Hood River, Oregon. The pilot, the commercially rated owner/operator and two additional passengers (four occupants total) incurred minor injuries during the accident. A VFR flight plan had been filed but was not activated and visual meteorological conditions existed. The flight, which was personal, was operated under 14 CFR 91, and was destined for Eugene, Oregon. The pilot's father (right seat), a commercial pilot with more than 2,000 hours in the Mooney M20D, reported that the engine ran smoothly on the ground and an RPM check prior to takeoff yielded 2600 RPM. The pilot (left seat) reported that she applied full power for takeoff on runway 25, a 3,040-foot long asphalt runway. The takeoff roll seemed long and the power didn't seem full. She rotated the aircraft at 65 knots, became airborne and then the aircraft settled back to the runway. At that point the pilot's father took control of the aircraft and both pilots felt that an aborted takeoff would result in an overrun into a grassy area containing vehicles and pedestrians. The pilot's father was able to establish a shallow climb rate and the pilots reported that the stall warning horn did not go off during the climb. The terrain west of the airport was gradually rising (refer to CHART I). The flying pilot then banked to avoid a large tree and the aircraft settled into the treetops eventually coming to rest inverted in a bog (refer to photograph 1). Winds at The Dalles Airport, 16 nautical miles east were reported as 300 degrees magnetic at 5 knots approximately 25 minutes after the accident. Density altitude at Hood River was estimated at less than 2,000 feet at the time of the accident. The weights of the occupants and any accompanying baggage, as well as the total fuel weight aboard did not exceed the aircraft's maximum gross takeoff weight. Post-crash examination and test run of the engine revealed that the number one cylinder could develop no more than 25-35 pounds of compression. Further examination revealed the number one cylinder intake seat had dropped down out of its normally seated position at an angle preventing the valve from seating evenly during the compression stroke (refer to Attachment M-I).