Did the shop stick a pressure gauge on the engine? Do you know what is the actual oil pressure? Most of the ground type sending units close the circuit about 5psi+/-. Low oil pressure usually means that clearances somewhere are high, but in most cases they are still getting oiled. A tight engine has higher oil pressure. I once had a CJ3B that would idle down to about 4psi, gas it and it'd spike up to 15. Never made a noise, probably still running. You could have engine wear all over the place, or one place real bad. Might even have a failed pressure relief valve spring.
In all my engine rebuilds I must say I never repalced a worn out oil pump, I replaced a lot of them but none had a total failure, they willusually put out plenty of oil and pressure.
On your tractor, if you rev the engine up does the light go off? I'd still want to see a pressure gauge on it when idling and revving. Personally I'd take the guys repair or see if he will take it back. Or just run it! Either way I'd put a mech oil gauge on there. You can also replace all the rod and crank bearings without removing the engine.
Good Luck,
Rob