Chrysler had that same problem in the early 90's. A friend of the family had a Plymouth or Dodge sedan that all the paint peeled off to the primer. Chrysler actually did a recall on the paint on those cars and extended the paint warranty. She had it repainted for free.
When I was referring to the paint on earlier (pre-clearcoat) cars, I was especially referring to metallic silver and light blue or green paint jobs. Those were some of the more common colors. Solid paint jobs, and dark metallics held up OK. My 1960 Corvair shined up nice until the day I junked it in 1979. It was a light blue non-metallic acrylic paint. By 1979 our 1973 Mazda RX-2 (light metallic blue) was already pretty faded.
I had a 1985 Lincoln Continental which was ten years old when I purchased it. The light blue clearcoat paint still was very shiny on it. Eventually, the desert sun did fade it, but it took several years, longer, I am sure, than the planned lifetime of the car!
__________________ "We are forces of chaos and anarchy. Everything they say we are we are, and we are very proud of ourselves!" -- Jefferson Airplane
Dick Naugle says: 1. Prepare food fresh. 2. Serve customers fast. 3. Keep place clean.
Our 1980 Bonneville was Medium garnet red Metallic/dark garnet red metallic two tone. The paint was never right on the car. At least the powertrain was done right. In 13 years and over 180,000 miles we never even had the valve covers off the car. Just brakes, starters, alternators, water pump, and I think the battery was replaced once, and the fuel pump was replaced once. Considering the age and mileage we put on that car I consider the repairs quite minimal.
Yes, heavy oxidation can be removed. But that big circle in the middle of your hood is more than will buff out. It looks to me like you've gone clear through (if you'll pardon the pun) your clearcoat and into the paint.
I believe a repaint of the hood is your best option if you have to have a good hood. However, you could try to blend in some clearcoat over the spot or re-clear your entire hood.