from what i can tell any oxidation is bad, whether its from the factory or happens in an engine. heres another little tid bit i just found. its part of a big long article and its based for industrial use but i think some parts still apply to us. if im wrong here set me straight! im no chemist, im just trying to make some sense of it all
Corrosion
The oxidation process produces a number of by-products, including acids. Acid attacks component surfaces, causing pitting and surface degradation. In the presence of abrasives, a corrosion-abrasion cycle can erupt whereby corrosion produces easily abraded material that reveals easily corroded nascent metal in a cycle that exaggerates the rate of wear. Water, which is also produced as a by-product of oxidation and ingested from other sources, increases the corrosive potential of acid in oil.
Varnishing
Polymers and oxides are other by-products of the oxidation process. When varnish comes out of solution, it tends to condense onto component surfaces. When varnish collects on gravity-feed oil passageways, starvation can result. When varnish collects on the return line of a flow-controlled bearing, such as those found on a paper machine, the obstruction results in an increased pressure differential across the bearing, which stresses the seals and can cause leakage. Varnish deposits on servo, proportional and other tight-clearance hydraulic valves result in sticking, which can slow or stop operation. Compounding the issue, particles tend to stick to the varnish in valves, which further exacerbates the sticking problem and causes abrasive wear. Varnish deposits that accumulate in the inner surfaces of tanks, pipes and hoses are chemically active and shorten the life of new oil added to the system during a top-up or change.
Loss of Lubricity
Oxidation affects the physical properties of the oil, altering its flow and lubrication characteristics. Likewise, sludge suspensions produced as a result of oil oxidation provide polar surfaces to which active additives like antiwear agents adsorb to the surface of the sludge, rendering them unavailable to protect the machine surfaces, which is their intended function.
here is the whole article if you want to read it
http://www.machinerylubrication.com/Read/596/lubricant-oxidation
