nphinc I think that the area between the cams has the ability to collect water , once you know that you are not loosing engine coolant then you can look for the water and how it would be getting into the area of number one spark plug. A cooling system pressure check could either confirm that no water is escaping or let you know that it is a problem.
I have seen some water related problems due to water getting into the temp sensor in the Channel between the Cams. The boot on the coil seals the plug well and if that was faulty it would allow the water to get in. Seal of the VC at the plug well would definitely account for the oil.
Looking forward to the up dates.
mrtn the last time I worked on a Kent series engine it was in a Bobcat, and before that there was one Sailboat Auxiliary Kent series engine. We stopped seeing those in cars with the first Series Fiesta's. There were also a few Pinto's with the Kent, But I am now showing my age
You are right on about the sludge that forms when the oil is not fully heated on short trips