You also have the pressure relief valve in the oil pan that might have gone bad.
When you pull the oil pressure sending unit to check with the mechanical gauge, don't forget to extract the screen that's under it and see if it's plugged.
Since you have the sending unit out, I would go ahead and replace it regardless.... And only use the correct AC Delco one.
What concerns me is the pressure dropping when you let off the gas. Your oil pump is driven off the crankshaft, it's relative to engine RPM and not the gas pedal. If you still have the AFM/DOD, now that could react when you let off the gas pedal and affect oil pressure. (Because it uses solenoids that operate with oil pressure. Let off the gas and if a solenoid gets the electronic signal to do whatever and triggers the solenoid, it's going to pull some oil pressure. Nothing else really makes sense to me for letting off the gas and losing pressure.)
So if you pull your intake to check out your oil pressure sending unit and test it with a mechanical gauge, you should probably pull the VLOM plate and replace the o-rings under there. It would not be a collapsed lifter, because then you would be hearing it. So I'm leaning towards one of the solenoids. If that's the case, it's a great time to do the AFM delete. But if you want to keep it OEM, you might be looking at having to replace that VLOM plate.
Lol, that's my two cents worth