Is there a certain degree of inefficiency with low back pressure? Yes. Are your valves toast at this point, not necessarily so, but you are well on your way to serious issues if you don't compensate for the loss of backpressure in other areas of the engine. The blue smoke is a sign or wearing/worn valve guide seals.
Here is a great tech article from Flowmaster on engine building and creating a homeostatic neutrality between increases and decreases in backpressure. I would recommend you read it and consider the ramifications of the loss of backpressure to the life of your engine.
http://www.flowmastermufflers.com/backpressure.html