Hey Greec, This is what we did-
Just go down to your nearest local farm and ranch store and pick up several 5 gal buckets of the cheapest hydraulic fluid you can buy or whatever it says it takes, and get back to the tractor and fill it up to normal level, it will take a lot. Run it at light duty for a few hours, and the fluid will have to be changed out again after just a couple of hours at the most, or sooner if it turns milky again. I think after one flush it should get most of the water out. If you can get a boot for the gear shift it will help a lot, we made a quicky boot with a funnel inverted and slid down the gear shift and then taped the skinny end around the lever. After the first flush keep a close eye on it for color of the fluid and that it does not get milky. I just read here :
http://www.ytmag.com/case/messages/84611.html you may have a washable filter in there that you need to take out and clean also, look for the plate they are talking about around the drain plug, but if it is 1950's era probably doesn't have it, but check and make sure, if there is one it is probably gummed up. They were discussing this causing the 3-point not to go down it looks like.
In that thread he never really said what model he had, but the reply the last poster gave on what type of oil to use was:
/quote
Case manual recommends engine oil. 5 wt below 32ºF, 10 wt 32-60º, 20 wt above 60ºF.
Some folks here use 10-30. I use a general purpose hydraulic oil mainly for the anti-foaming additive.
Doesn't really matter, oils are much better than when this tractor was built.
/endquote
However it looks like it depends on model, it looks like some models used 80 or 90 wt gear oil. I would still flush with the cheapest hydraulic oil you can find and then get the correct oil in there.
Here is a good thread on the case 310, might want to ask around there, it seems Joe is a very knowledgable fellow on these Cases..
http://www.ytmag.com/cgi-bin/viewit.cgi?bd=case&th=84108