A agree that is a lot of trash and filings but why it is there is unknown. Before I did anything else I would want to assess the operation of the tractor and all related hydraulic functions. So if you have replaced the fluid, filters and cleaned the screen, how well does it operate now? I would also recommend you save out some clean buckets to catch the new oil again later.
While the shavings look bad this could have been left over from a previous repair, no way to know. There is also the possibility you have failing parts in the case or pump, I would conduct a pressure test of the hydraulic system and see how it turns out. If the tractor seems to perform well under load and everything appears to work well I would work it hard enough to get the hydraulic oil warmed up fully and then drain again to see how much trash I could get out of it. Check the screen again too. You should get a lot less filings the second time. If you get less filings then refill and use it for a few months and pay attention to any sounds of failure.
If you have refilled the fluids and operate the tractor and have problems then you will need to make the repairs. I would not jump to doomsday conclusions just yet.
edit to add You guys must type faster than me, I agree with the others above good advice and the same as I recommend,