Wert is used here as a predicate adjective because it comes after a verb like sein. This means it has to go at the end of the "middle field" (which is the end of the sentence in this case, but is not always - see part IV of http://www.dartmouth.edu/~german/Grammatik/WordOrder/WordOrder.html for more info).
Wert is one of a group of adjectives that also requires a noun or pronoun to make sense: the word "es" explains what is of value ("it" is of value). Because "es" is not the subject pronoun, it has to be placed in the next part of the sentence, which is the middle field. Wert has to go at the end, so the pronoun goes before it in this situation.
Just as ab completes the meaning of holen in abholen, so adjectives (and other parts of speech) can be closely associated with the verb and be necessary parts of the predicate’s meaning (i.e. a verbal complement). From that Dartmouth website: (see A1 c), d) and e) “Ich fahre gern Auto. I like to drive (a car). vs Ich fahre dieses Auto gern. I like to drive this car. In the first sentence, the concept is "Auto fahren." In the second, the concept is "fahren" (modified by "gern"), and "dieses Auto" is the object - what I like to drive - and hence is not positioned at the end as a verbal complement.” Dartmouth gives an example of an adjective being used just the way “wert” is used in our Duolingo example: "fleißig sein": Sie ist in der Schule sehr fleißig.
I don't know about in German, yet in English they are two slightly different concepts, or come from differing points in time. You say 'That was worth it' when you've gotten into trouble for doing something, or may get into trouble. 'It will be worth it!' is also common. 'To be worthy' is an estimation of value, and is either a statement of fact about an object or person, or is an honor given/about to be given to someone/thing. 'Worthy of praise' and 'I will try to be worthy' are the usual ways this is used, and even then is a bit old-fashioned.
Can a German speaker help me out with the details here?
In "Das Öl ist es wert," the "es" is [in] the accusative/objective, is that correct? Is "wert" functioning as a preposition, as in English, which is why taking out the "es" (leaving "Das Öl ist wert" or "the oil is worth") is incomplete and therefore nonsense?
I don't know how to say "a lot" yet, so assuming Google Translate is correct in suggesting "Menge," would it be correct to say (about valuable/expensive oil) that "Das Öl es wert Menge," without having that "es" in the construction?
I'm not German but I can answer the last part. The word for a lot in German is viel or viele. So you would say "Das Öl hat viele Wert." literally translated to the oil has a lot of worth which as you can tell is understandable in English. I don't know about the word Menge though.
Here, you have two things you compare; one is worth the other:
Das Bild ist 200 € wert.
Unsere Freundschaft ist die Mühe wert.
The first is something you value, the second is what price you are willing to pay for it.
"Das lohnt sich" on the other hand means "das" brings you some gain, without specifying what or how much:
"Recyclen lohnt sich!" - It may be worth it financially, or for the environment, it isn't specified.