Ya, when ring clearance gets destroyed, a diesel engine basically uses crankcase oil as fuel. I've run a burned piston in a Cummins for about 50 hours, and it was burning a quart of crankcase oil every 10 hours. Not a harbinger of imminent catastrophic failure, just a sadly inefficient engine, both in terms of power and "fuel" efficiency.
If your crankcase oil level is increasing to cause the smoke, it could be due to leaking injector pump seals. Not sure about Kubota engines, but fuel bypassing weak injector pump seals can end up in the crankcase, too. [I have never understood why the fuel that is bypassing the injector pump seals could not be directed somewhere (anywhere) OTHER than the crankcase, by design...] Excessive fuel pressure upstream of the injector pump can cause the same problem, with the end result often being catastrophic seal failure in the injector pump. Been there, done that. Twice. I've seen engines puking fuel out of the crankcase vent when running (enough to see the stripe on the road in your rear view mirror). Last time that happened to me, I was in the Balto Inner Harbor Tunnel, towing a load. Not Good. White Knuckles. Looking for the next off-ramp...$400 tow bill imminent.
Bottom Line: You do NOT want to be using diesel fuel as a a lubricant in the crankcase!
-Paul