That piece of info came from someone on another forum who knows a lot more about these tractors than I do, and he probably got it from someone that worked there back in the day, as that's where most of his knowledge came from.
The insides of the Kohlers aren't painted, and they don't leak, and neither do any of the farm tractors I've worked on with un-sealed engines and/or transmission internals, so I question the validity of that statement.
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