That is a good question. Is it a start of a head gasket leak? I seem to remember you pulling the shrouding and cleaning the cooling fins?Some oil can migrate through the intake valve seal for that initial puff of smoke, or past the rings. You could do a leak down test to see if that shows you anything.
Your oil level checking is right on. How much will the level drop? IE, does it drop an 1/8 of an inch and hold there or will it travel to the bottom of the safe zone?
Starting with the simple stuff: You first would want to verify that there is absolutely no presents of fuel with the oil. As far as oil grades, SAE 30 may be an improvement over the 10W30- or a different brand possibly. Kohler puts the OK stamp on straight 30 if the ambient temps are typically 50 degrees plus. Verify no external leaks, dipstick seal is intact etc.

I will check these things the next time I have the tractor out. While it is winter here, east of Raleigh we are having some nice day. I had the tractor out last Thursday, hauling mulch. We just put in a new patio so hopefully I will have the tractor out next week and will thoroughly check it.

I may try to use the 30SAE oil as I use the tractor mostly for mowing and it does get hot in the summer here. Maybe it is a combination of and old tractor and the 10W30? multiweight oil that comes with the JD service kit for the tractor.

Dipstick seal: When I cleaned under the hood last spring I don't remember a dipstick seal, Could I have taken the dipstick off during the leaning and not noticed it?

As I said the tractor is 10 years old and works perfectly. I would like to do any necessary service that an old motor may need to keep the tractor for another 10 years. I would hate to loose it because I failed to notice a problem that could be corrected.