The brake components are made of rubber. Rubber (not to be confused with Neoprene, Nitrile, or Buna) is not compatible with oil or any petroleum products. It will swell, loose it's ability to seal, and cause the pistons to bind in the cylinders. The binding will cause the shoes to not retract, and the master cylinder not to retract far enough to open the bypass port, resulting in the fluid building pressure, and the brakes failing to release, and over heating. Same thing with the hoses, they will swell internally, blocking or restricting the flow to and from the wheel cylinders.
The rust pits are not caused by the oil. Chances are, at the age of the vehicle, the cylinders were long ago beginning to rust pit from moisture in the system, a very common problem in older vehicles.
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Today's Featured Article - Fordson Model N: Field Service Operations and Lubrication - by Anthony West. The daily or weekly servicing of any vehicle is of the utmost importance, and in days gone by when our favorite tractors were doing an important and Commercially vital job on the farm, these service operations would make a major difference to the running costs and economy of the farm. This being so, it surprises me to see how many enthusiasts attending rallies, shows etc, seem to be unaware of the importance of this constant attention. Possibly the modern machine with its 6,000 mile or even once
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