The brake components are made of rubber. Rubber (not to be confused with Neoprene, Nitrile, or Buna) is not compatible with oil or any petroleum products. It will swell, loose it's ability to seal, and cause the pistons to bind in the cylinders. The binding will cause the shoes to not retract, and the master cylinder not to retract far enough to open the bypass port, resulting in the fluid building pressure, and the brakes failing to release, and over heating. Same thing with the hoses, they will swell internally, blocking or restricting the flow to and from the wheel cylinders.
The rust pits are not caused by the oil. Chances are, at the age of the vehicle, the cylinders were long ago beginning to rust pit from moisture in the system, a very common problem in older vehicles.
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Today's Featured Article - Product Review: Black Tire Paint - by Staff. I have been fortunate in that two of my tractors have had rear tires that were in great shape when I bought the tractor. My model "H" even had the old style fronts with plenty of tread. My "L" fronts were mismatched Sears Guardsman snow tires, which I promptly tossed. Well, although these tires were in good shape as far as tread was concerned, they looked real sad. All were flat, but new tubes fixed that. In addition to years and years of scuffing and fading, they had paint splattered on
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