If it is pumping that much oil the rings may very well be stuck. Soak it for a week with ATF and then work the snot out of it. I'm not sure that the oil pressure will improve but I would pull the pan and have a looksee around. You may just find that the pickup is half blocked with sludge. With pressure that low and no lower end noise it may be a blockage. Usually when things get that loose you hear it.
I'm not familiar with Herc engines - what kinds of stem seals did they have? You may be sucking oil in from above. Also, run it a bit and crack the drain plug looking for water. The really smokey pic looks a little white to me.
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