Well you know the excess oil temp has to be coming from somewhere.... usually unwanted friction. If it runs 260 actual oil temp with 170 water temp there is something drastically wrong inside the engine. Another thought could be the engine is running way hotter than you think it is, Just because the cooling tower is showing 170's water temp does not mean the engine might not have a cooling issue, hot spot in heads etc. You're not running a Thermostat in the engine are you?

I have seen one burned up pushrod add 15-20 degrees of oil temp... so yeah pushrods are kind of important, although I doubt that is your problem if you had the VC's off & looked at everything there. I was also going to ask about possibility it was wiping a cam lobe but I see it is a hyd roller.

BTW I shut our motors off if they hit 220... I can't imagine running one at 260 for any period of time. What oil are you running?