If you really think the lifter is completely flat, i.e. not adding any hydraulic adjustment to the system, be very careful at how tight you snug down that rocker. You could end up with a situation where that valve never closes and you will burn up the valve real quickly. I am not sure how to test if there is any adjustment left in the lifter though, but if it is completely flat, then it will essentially function like a solid lifter, which every solid lifter has a little gap in the system to allow for thermals. Glad to hear you found the root cause of your oil problems.

Sean