The 'hearsay' factor was my main consideration when I suggested that it's probably a head gasket... If you or Bern had said that it has 'oil in the jacket'... I'd take that as good. I've lost count of all the times over the years that someone either on here or locally has said to me that their engine has oil in the water only to find out it's nothing more than a blown fire ring on the gasket. I've had probably 3-4 of them on my own stuff.
I would take with a healthy dose of skepticism the assertion that the main oil gallery can cavitate into the water jacket.