I had this very symptom in my '82 (with a '74 1700 installed).  I put in another gallon of oil and watched it spew out the timing hole, like a garden hose all over the top of the engine, from the flywheel area.

The engine r&r revealed that I had blown out an oil galley plug from the back (forward facing) end of the engine, saturating the new clutch.  Worked fine after I staked it back in, cleaned the clutch, and re-installed.

I'll guess you blew out an oil galley plug.

> Date:    Tue, 5 Sep 2000 10:54:09 -0700
> From:    Tobin Copley <tobin.copley@UBC.CA>
> Subject: YIKE! Lost 3 qts oil in 30 sec, messy eng. compartment...
>
> Hi gang,
>
> Blew something in my diesel vanagon yesterday, and lost nearly all
> our oil in just a few seconds, coating the engine compartment with
> oil spray, and leaving a 200m trail of oil down the road in the
> process.
>
> I'm getting a tow truck over to the island here this afternoon, and
> I'll have my mechanic on the mainland look at it and give me a
> diagnosis.  If any of you clever people want to take a stab at
> guessing the problem, I'll post the names of the guessers with the
> follow-up (if you want).
>