I had a Corvair back in my college days, and I know what you mean about the burning oil smell when the heater was on. I found that if you kept the engine clean from any wayward oil, it wasn't too bad.
The problem with Corvairs leaking oil were the oil dip tube seals. They'd leak and it was about $400 to replace them. A year later they would be leaking again. From what I have seen, they have been making oil resistant dip tube seals for Corvairs for some years now and they are so good that once you replace them, they are fixed for good, no more engine leaks. I was at a car show this year where the local Corvair Club came and when they left there was not one drop of oil on the ground where those cars were parked.
Quite a few VW bugs have gas heaters, but there is nobody to fix them anymore. There used to be a guy who specialized in repairing them, but he got out of the business a year ago or so. It was common to see used VW's listed with the "Gas Heater" option back in the 60's & 70's. I went shopping yesterday in my bug when it was 32F yeaterday and after I drove a few miles, the interior warmed up nicely with the standard heater. The way to keep a bug's heater system working fine is to make sure no debris gets in the air hoses/vents. I vacuum mine out once a year.