Damaged/Cracked cylinder

My partner and I just purchased a Piper Warrior from California. All
the compressions on the engine are 72 or better. We test flew for about
two hours and found no problems. Just recently she was taken in for the
Canadian inspection. The AME in Brampton told us that the compressions
were good but one cylinder was cracked. What I would like to know is
how can you have good compressions with a cracked cylinder. Also how
can you determine that a cylinder is cracked without dismantling the
engine. The aircraft is a PA28-151, with a 0-320. If anyone can clairfy
this issue I would really appreciate it. Can you fly the plane this way
or is it dangerous.

Thanx Jurgen..