My brand-new engine runs just above the LED; that's not so scary.  The key
question is: does it climb above that level when you put a load on the
engine?  Try cruising up a long grade on the highway -- are you close to
overheating, or holding steady?
I wouldn't have thought that the oil cooler was the source of the trouble;
it's a pretty solid block of aluminum.  If anything, the tortured little
coolant hoses snaking in and out of it on top can get abused, but that
wouldn't cause oil in the coolant.

Best,
d.
1990 GL -- "Mudskipper"