To take the last question first, Atlas changed the recommendation sometime in the 50's (retroactive) to SAE 20 ND. Although it didn't specifically say ND at the time. HD (for High Detergent) didn't start showing up for use in cars & trucks until later.
SAE 20 is approximately equivalent to ISO 68.
There are several reasons for not using HD. One is that the purpose of one or some of the detergents is to scavenge moisture from the air trapped within the newer engines after the mid to late 60's. As machine tools aren't sealed and should never get hot enough to boil off the accumulated moisture, this detergent is actually detrimental. The others are that none of the other detergents have any beneficial effects and quite often the oil costs more.
Back to the grease, the practice of pumping new grease into a joint until it starts to come out the seals or wherever is another mostly automotive practice based on the fact that greasing is only done every few thousand miles and that in operation, dirt and water that might get into the joint is mostly pumped out by the practice. On machine tools, hopefully they won't ever be submerged in water and mud so only a little fresh grease is supplied each day or before each use in the case of hobby machines.
On the felt washers, their primary purpose is to keep chips and dust out of the bearings. And secondarily to retard grease slinging. For the secondary purpose, they would not be effective against oil.
