Since the bearings are still serviceable for now, I'm putting the engine back together for more in-use diagnostics. I polished the piston and rounded the edges as much as possible before reassembling the pump.
We've also learned a bit more about the circumstances that let this car run low on oil in the first place.
For one, of course, the pump may have intermittently been hanging up even before the fateful road trip from Florida to California where it ran down to 1/2qt of oil and did all the bearing damage. Some of that damage may have happened back in Spain.
Second, we found the oil level sensor wires had melted and were intermittently shorting together, which explains why the oil level readings were erratic.
Third, the oil pressure light fails off. Meaning that if the cheap plastic connector rots and falls off, the light doesn't come on! It will only come on with a good connection and no pressure. It was rotten and loose. But we also found that no oil pressure light came on when we were actively hearing rod knock, so it may also be calibrated incorrectly and will stay off even when oil pressure is too low to maintain bearing function.
Finally, the dipstick... I think it was just hard to interpret for a new owner. Since the dipstick tube does an S-bend on the way up from the pan, it gets oil smeared all over the stick. If you have oil, one side will have a clear line, while the other will have a smear. If its low on oil the first time you check it, it will just have smears and will be hard to undertand...
That said, we filled the oil after reassembly to the specified amount, confirmed the level on the level sensor, but the dipstick still read low!
I'm not sure if this was the situation originally, or if it was caused by us struggling to get the dipstick tube back in the engine while the engine was in the car (if you remove the tube, definitely put it back in before you put the engine in the car!) The tube doesn't fully seat in the block. The stopper ring that is supposed to sit against the block is sitting a little above the hole. I can feel this with my finger, but it can't be seen, as this whole situation is hidden in the engine mount/carrier bearing block on the back of the engine block.
So that brings us to the diptstick:
I'm considering just getting a universal dipstick and adjusting it to our new reality. But meanwhile, if anyone can confirm if this original dipstick is even the correct length, that would be nice to know.
I also think the dipstick may be part of our erratic idle behavior. The rubber top of the dipstick was split in two and held together with electrical tape. It clearly isn't sealing properly in the dipstick tube, so I think there is an unmetered air leak in through the dipstick tube, through the crankcase vent system and into the intake manifold. This is my biggest motivation to get a new dipstick...
