Thass fine, but the
only way to definitely know where the oil is coming from is to pop the
compressor head off and look at the piston tops and cylinder walls. Same as any engine. Likewise the head gasket will be "visibly" blown and/or there will be a "carbon track" on the mating surfaces of the
compressor head and the
compressor body. Hard to explain unless you've actually done it before.
As for the
dryer, it does have a piston... of sorts (more of a check valve) that releases the pressure. I've never had a dryer apart so you're on your own there. But you
will have to clean that junk out. Might be cheaper to get a rebuilt.... depends on how much you value your labor at.
And yes hammer, you can pull your
other head if you want.