Tommyg,
I have to agree with Cidertom, the restoration section would be a better place for this discussion. But until you do that here is my two cents.
I have a Frandee, the predecessor to the Trackmaster. The wood cleats on the Frandees were originally 2" thick hickory, I made my own from lumber a friend harvested for me out of Indiana. If you start a new thread in the restoration section I will post pictures of how I did it showing the angles, hole patterns, relief at the tire guides, etc. I would imagine you could also use oak if you wanted, I used hickory because it is what was originally used, and it is very strong, I have not broken any cleats.
Oils: the Frandee has a different drive than the Trackmaster so I do not know what to use there. If your Trackmaster has a custom transfer case like my Frandee does then I would suggest using conventional oil instead of synthetic. I used synthetic in mine for a while but it would leak out very badly, the conventional gear lube does not leak out much.