a spark plug that is loose in its hole will overheat. It depends on intimate contact to transfer the heat to the cylinder head and then to the cooling water. If it overheats enough, it will cause pre-ignition which WILL destroy the piston-melting a hole in the top of it. If the cylinder holds good compression, the piston is not damaged. The gross oil consumption can be caused by a valve guide that is loose and working in the head--or damaged piston rings, scuffed cylinder, etc.

Good luck. It does not sound like fun