Thanks for all the advice, guys. Between these answers and some threads i found searching, it seems like it's one of three things:
1) Most likely - time for a 5MT; my tranny is toast
2) Maybe, but not likely - Check the switch on the side of the tranny and be sure it's telling the car that it's in reverse. Cool, but...what switch? Where on the tranny? How do i tell if it's 'telling the car that it's in reverse'?
3) Way not likely - Check some gasket between the oil pump and the tranny

So, it seems like i'll soon be a 5MT convert. I'll go to the auction this weekend and look for a 95-99 Legacy 5spd. Right idea? Thanks again. Marc