I had a Monarch toolroom lathe with a set thread stop and reverse to the lead screw, and one of my friends has a Pratt & Whitney with the same feature, and they are wonderful! they will thread a coarse thread right into a thread relief, they just stop dead, then you withdraw the tool using the cross feed that has a dead stop, for long threads, the half nuts can be opened to return to the starting point for reengagement, then the lead screw is re engaged, and it's off to the next cut. Short and coarse threads, the lead screw is merely reversed and runs back to the starting point, where it is again kicked off by a set stop.Other members who have built the auto stop have made them sound great and much faster.
Will have to build one myself when I get a couple years of other projects done.
That 2.5 inch dia. will limit your rpm some but the hardness might be the determining factor.
The oil or coolant will depend on the material and your cutting speed.
If its an oil hardening material you may not want to use cutting oil and the interface must be kept cooler. IE: slower cutting speed and lighter feed as you already mentioned.
You got a adventure if ya get something wrong. A nice part if ya get it right.