Excellent explanation Shawn! Good stuff!
It's a talent in it's own right to be able to explain what's going on in terms that about everyone can understand, and that's a pretty good job you did right there!
As far as 50's designed engine, with some 60s materials making it up, it's not a 'BAD' engine...
When you compare it to 'Small Block Chevy', the Chevy oiling system is what keeps them alive for ever...
Small block Ford usually makes more power, but they don't have the longevity a Chevy does simply for lack of the oiling system.
My two biggest complaints about AMC engines was they didn't offer forged steel rods for the smaller displacement engines,
And they have a LOUSY oiling system.
Anyone that has had a few of these apart that died of natural causes, or had one on a flow bench or dyno can name a few other things, but those are the big two for me.
The cast crank will take over 500 Horse Power, just like a lot of the cast crank versions from other manufacturers.
The block has pretty good main webs, so the block doesn't splay out,
The block is pretty rigidly made, it doesn't twist like crazy like some engines do when you make horsepower,
And for a 'Smog' engine, the heads/combustions chambers are reasonable.
The rods are weak, like a lot of cast iron rods are, and the oiling system is horrible.
I spend most of my time making sure the back of the block gets oil when working on one for myself...
Getting oil passages to line up, getting some oil delivery to the back of the block (Looping),
And trying to get those factory front covers/oil pumps to tighten up so they make volume/pressure.
If you still have a LIVING engine, then it was drilled correctly from the factory and oil is getting to the rear.
Not large amounts of oil, since no AMC engine delivers large amounts of oil to the rear in stock form,
But it's would have shown up any defects in the last 27+ years...
So you are starting with a good 'Core', and that's usually the biggest hurdle in getting a reliable engine.
Pay attention to care of the rods, and getting the oiling system in so it makes volume/pressure and can deliver it to the back of the engine and it will live for another 27+ years or more.
It's no power house, but it will move a light weight CJ around pretty good, and it won't break drive line parts in most cases, so the 304 is a pretty good balance between power and longevity of the vehicle.
We all know RUST usually kills CJs before the engine gives up, so that should tell you something!