Not that I know much about old bikes, but in general, I would say that there is no such thing as a bad bike unless it is dangerous to ride (broken frame, etc.). There are some bikes that are better for some situations, but this old bike sounds like a great project.

I am sure that if you can post the make and model, you can get better advice from people who know. And if it has horizontal drop-outs you will hear people telling you to convert it to a fixie.

BTW, oiling bearings from the outside don't do much except make a mess. Get them off and repack/replace them. Hopefully, the cups are not toasted.

Sounds like fun. Wish I had something like this to work on right now...

- Jeff