thin oil is not good but the water will collect at the bottom of the pan. i am with the postition of doing more research before tearing off the head. there are tests that can be done to verify what is happening.
1. as noted above let some oil out and put it in a glass jar. if there is water in it it will settle to the bottom overnight or sooner.
2. after the hose broke he could have a void in the system of air trapped under the thermostat. it is normal to need to add coolant after it is warm enough to open the stat.
3. the iron heads are indeed tough and will run for some time wo any water without damage (dont try it though).
4. the radiator can also be pressure tested. this is much cheaper than buying one and trying it out.

step #1 is the most important.

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[SIGPIC] Diesel loving autocrossing grandpa Architect. 08 Dodge 3/4 ton with Cummins & six speed; I have had about 35 benzes. I have a 39 Studebaker Coupe Express pickup in which I have had installed a 617 turbo and a five speed manual.[SIGPIC]

..I also have a 427 Cobra replica with an aluminum chassis.