Are you saying that you have a tiller with metal wheels?? As in steel centers wrapped in hard plastic tires?? Wow, last I knew they went to plastic wheels a LONG time ago.
If my first assumption is correct, that machine is old enough that the wheels probably ride on bronze bushings. I know because I've got one. It's Garden Mark (Montgomery Ward) instead of Craftsman but it is almost as old as I am. My dad bought it new in about 1961 or 62. Anyway, I suppose it is possible that they manufactured them for a time with steel wheel centers and nylon bushings. Either way I would continue with the penetrating oil method a little longer before getting too rough with it. On the other hand, if the bushings are nylon, and you utilize some heat and destroy them in the process, new ones are pretty simple to make.