Find the oil baffle that goes under the valve cover. It completely covers the cam shaft and has successfully worked for others with far worse symptoms. I have them in all my diesels. i tried to find a picture of one, but couldn't find one. You can post a WTB for one in the for sale section of this web page. Or Email
[email protected] and he can send you one.
The oil baffle may solve you problem for now.
Why rings wear out. There are two causal factors.
Driving too conservatively. Carbon deposits form in the ring lands, behind the rings. Eventually, the carbon becomes so thick it pushes the rings out and they wear faster. Some times they even stick in the ring grooves and the compression goes by by. This can occur at 80,000 miles or less, if someone drives like a real sausage.
Solution: drive it like you stoll it.
Causal factor 2, long hard life 300,000+ miles. The bores in the block become egg shaped, the rings have to do a lot more booging in the ring grooves. Piston clearance becomes excessive. Death rattle sets in, and if its pushed to its limmits, skirts break off the pistons and the show is over.
Oh, and one more. never changing oil, and / or running S rated oil instead of C rated oil. Soot particles build up in the oil, the oil either doesn't have the ability to break down the soot particles, our it lost the abilty to do so. The soot particles actually machine the inside of the motor: bearings, bushings pistons, ring and bores. Eventually the compression is so low, it won't start any more. once again, show over.
how bad is your moter? hard to say. One the pluse side, it still starts. On the negative side, you have enough blow by to get the overreving thing, but apearently not enough to get the full blast runnaway, complete with overheated breaks and a really wild ride.
so, it may live for a while, maybe a long while.
Find the oil baffle and give it a try. Don't baby it too much, but don't thrash the living beejeepers out of it either. Run a C rated oil and keep your finger crossed.