if you can figure a burner in the burn tunnel, it should work. However, after reading this:
http://www.journeytoforever.org/biofuel_library/ethanol_motherearth/me4.html My main concern would be keeping that burner clean. It needs to be easy to disassemble. It would seem easier to soak your wood in the oil and burn that. That way your burner is being continually replaced.
There seems to be some disagreement on the safety of burning used engine oil no matter the temp.
I am not sure if you meant to make charcoal with the RMH to use for melting metal or if you figured on melting metal directly on the RMH. In would suggest that the RMH will not have much in the way of parts that get hot enough to melt anything beyond solder or printers metal (not even sure about those). The iron parts of the RMH last over 20 years.