Low Engine Oil Pressure

I would remove the oil pressure sending unit and pop a mechanical gauge in there to see what you actually have. At first, your description matched exactly what I used to see at a very nice Chrysler dealership. They had a lot of sensor failures in the 1990's that caused low pressure readings, but the clue always was the pressure would drop at idle, then pop right back up and hold steady when engine speed was increased just a little.

On most engines, a camshaft bearing has to be really wiped out before the oil pressure will be low. A better suspect is worn crankshaft and/or connecting rod bearings. Their clearance can be checked without removing the engine. If it is excessive, you might get away with installing new bearings. If you wait until a connecting rod starts knocking, it will be too late. Once it starts that hammering, the excessive clearance will increase exponentially real fast. The journals will be torn up and they will destroy new bearings within a few seconds. You have to replace the crankshaft then, along with the bearings, but then you still have to worry about metal chips running around in there.

I replaced the crank and connecting rod bearings years ago on my 1988 Grand Caravan in a misguided attempt at solving an elusive knocking noise. It did not change anything, and that engine finally blew its first head gasket at 420,000 miles. The van was so rusty, the carpet was the only thing holding the front and rear together, otherwise I would have repaired it. (By the way, I am searching for a rust-free 1988 with 15" wheels from down south).

The only thing that might make this not feasible on your vehicle is if there is a welded-on cross member under the oil pan. If there is, you will have to raise the engine to get clearance. Normally that isn't too difficult on GM's and Chrysler's. It is a real pain on Fords.

As an alternative, you might look for a nearby community college with an Automotive program to see if they would be willing to look at it. Understand they will only do engine work when they are teaching Engine Repair, and that could be only once per year. The work has to fit what they're teaching, and it has to provide a valid learning experience. At my school, we charged ten dollars per hour for what the job was supposed to take. We got parts at real good discounts, and marked them up ten percent to form a "breakage" fund in case we damaged anything. Due to the limited number of hours the kids were in the shop, it could take a week or two to get the truck back, but you will save a lot of money.

Do not overlook the oil pump. Yours is driven by the snout of the crankshaft, and my resource even has a comment on using high-volume pumps for high-mileage GM engines that have low oil pressure. That suggests this is a common problem and the pump is a permanent solution.

As far as why the dealer wants to sell you an engine, a high-level national instructor has shared a lot of stories about "customer-unfriendly business practices", and this is one of them. They rated the top manufacturers for customer-friendly business practices as Hyundai, Toyota, and Chrysler. They put customer satisfaction ahead of quick profits. VW, Audi, BMW, and GM are at the bottom of the list. You can expect a huge bill every time you visit the dealer's service department. They might also be looking at the truck as far as rust and wear. If it is in good shape, they may feel a rebuilt engine is a good value. Be aware though, if you get a second opinion from an independent repair shop to have your engine rebuilt, I would expect it to cost half of what you were quoted.

If a new oil pump gets the pressure up, I cannot tell if it is because the old pump had excessive wear, or if it is because a high-volume pump overcomes the result of worn bearings. Logic would say if the bearings are worn, that wear is going to continue to escalate, and pumping more oil through them is only a temporary fix. To go so far as to list this comment on a parts web site suggests there is a real good chance the problem will be solved with a new pump.