Was the twisted shaft broken on one end??? If so was due to a locked up pump usually from a bit of nylon from the timing gear or a piece of valve stem seal... Assuming it isn't broken and just twisted, problem was likely from a high pressure pump and/or too thick of oil... With all the clearances correct a std oil pump is fine, one of the Ford small block virtues is that it has a very good stock oiling system... If it were a Cleveland you'd need all the pressure possible...
Just FYI: the P heads will not gain you anything in compression. They've got vitrtually the same size combustion chambers as your 289 heads (58-60 cc) And judging from that new el-cheapo timing set ? A piece of the old set's nylon gear wnet thru the oil pump. It could very well have the original factory cam hiding behind the timing gear. If you want an excellant timing set for a low buck price, go to your local parts house and ask for a set for a late 80's 5.0 HO. This will get you a double row, roller chain set. The one spinning the cam in my 331 cost me all of $25 at O'Reilly's 9 years ago.
The oil I drained out was the thinnest oil I had ever seen in my life. It flowed similar to water. The twisted one was broke, yes. The other one isn't broken.
just check craigslist or your local pick your part. you might be able to get a set of regular gt40 heads for around 300. cheaper and a lot less hassle
1968 model 289 2bbl chambers were increased to 63cc's and just going forward with the GT40 swap alone will net you a much better setup for compression, swirl and exhaust flow. I'd see what the shortblock looks like after disassembly and then go from there. If it will need too much work to straighten out(remember that cam gear is thin too)?.. I'd consider finding another good used motor to start with that already has the GT40 heads on it.
Got the cam out today. 3-5 teeth have scrapes and chunks in it. Here are the pics. Having trouble identifying it by the numbers. Going to post a thread on it shortly and see if I can get some help figuring out which it is.