Um ...not to throw cold water ...but how about genuine low oil pressure?
That's a real possibility. These Atlas engines are famous for low oil pressure at high miles. If it weren't for that and a couple other things, the engines are robust enough to probably last forever. An oil pressure test is the logical place to start IMO. Could have a weak oil pump, clogged oil pickup (with bits of broken chain tensioner plastic), leaky pick-up tube gasket (was a common thing), worn cam chain tensioner, or worn bearings. Or (more than likely) all of the above. If you go to change the oil press sensor, I'd invest a little time and at the same time while you have it off, perform an oil pressure test. Then you're not guessing and can plan what your next steps will be. You need a certain uncommon metric adapter to do it. I just made one out of a drilled/tapped large metric bolt (cut down short). But you can buy off ebay not that much. Do a search on the forum what the size is. Parts stores rent oil pressure testers ..some do anyway, but like I say, you'll need to come up with the right adapter. An oil pressure tester is a good tool to have in the tool box. Make sure you bleed the air out of the pressure tester hose to get a 'true' reading.
My H3 is running around 9-11 psi at hot idle, foot on the brake (in gear). At road speed it stays at ~25psi (hot). That's low, but still within minimum engine requirements. I've seen engines with as low as 4 psi at hot idle and they ran fine for many years. In fact I had a ford years ago which the oil tester gauge didn't even register at all!! Ha ha. At hot idle. And yet it ran fine for years. Sometimes on mine, in the summer, it dips down below that, probably to 8 and sets off the low oil pressure alarm. Not often but it does. I tested mine with a verified Winters 0-30 psi gauge (LOL!!) and cross checked it with a 0-60 psi verified gauge. People get freaked-out by low oil pressure, but you'd be surprised how long an engine can last on relatively low oil pressure. Mine's probably been like that for years. Regardless, I plan on pulling it's 3.7L I-5 in the spring and rebuilding it.
It's worth bearing in mind pressure gauge acccuracy isn't linear. They are designed to be most accurate within a certain range, usually falling in the 70-80% of it's entire reading range, and less accurate outside of that range. A good gauge comes with a spec sheet which will give the tolerances in certain psi ranges. So, if you rented a 0-200 psi chinese oil pressure gauge at a parts store that's been dropped and beaten around for years, and the gauge needle read super low on your PSI test, bear in mind, that's at it's least accurate reading range. And 0-200 is way too high of a scale unless an engine has good solid oil pressure in the 50+ psi range. The accuracy on such a gauge could be off quite a bit in fact. That's why i put a new, calibrated, 0-30 psi gauge on my H3's engine to get what I hope was a quality reading in the 10psi range. Anyway ...something to be aware of. Maybe you'll get lucky and your problem is a failing oil pressure switch.
Let us know what you discover.