35 psi... with the engine cranking over at normal cranking speed.... FAST?
Is this 35 psi on "ALL" cylinders? If not, what are the psi readings of all the individual cylinders?
Remove both cylinder heads to inspect the sealing surfaces of both the heads and the crankcase sealing areas.
Are the head bolts still torqued tight as they should be OR are they somewhat loose?
Did the alarm warning horn sound off with any kind of warning... and if so, what?
Describe the condition of the pistons and cylinder walls.... scored, melting down, tore up, completely dry, cylinder walls still somewhat lubricated, what?
Your mechanic being baffled is not a good sign... you may be wise to seek a second opinion if possible. Piston damage, cylinder wall scoring, piston ring damage, etc is usually caused by one or more problems such as weak ignition, VRO failure, oil restriction, air in oil line to mention a few.... also the VRO pump has been known to fail in such a manner whereas fuel (gasoline) would be pumped back into the oil tank which in time would result in an extremely lean fuel mixture.
Has the oil in the oil tank actually been checked?