318 runs great...but low oil psi...is it ok?

Wouldn't hurt to drain the oil and check it for metal flakes. You might even cut the old oil filter in half and see what's in there. If you find nothing, stick a good quality filter on it and good oil back in it and drive it. You'll never cut the oil light on with that pressure. It'll be fine. If I remember right, some of those oil senders actually don't cut the light out until it drops below 3 PSI. I have always heard the old timers say as long as the gauge needle moves up at all at idle, that's good enough.