There have been one or two instances of an engine letting go properly: conrod-through-the-crankcase type of failure, but they are rare. This sounds much less terminal.
I'd start spraying the exhaust clamps with PlusGas… a look into the exhaust ports might reveal oil trickling down a valve stem if a seal has failed. Still doesn't really explain the noise, nor the engine revving up by itself… even if oil was getting into the cylinders the compression (and the mixture) is insufficient to support combustion like a diesel engine.