Murphy's Law says the particles from the breather cap is also in the oil pan just waiting to wreck you main bearings if it hasn't already.
I would do a major flush and check the bearings before attempting to start the engine.
In your transmission posting, there is a picture of a Clark 204VO connected to a GMC engine. There is a good chance that your transmission is original to the bus. If you want to go back original, I would do a research on GMC engines. The 261 is Chevrolet. In the early days (pre 50's) GM worked closely with Flxible so my guess is they would also use the same engines of the current military equipment.
