Yes, that has always been my understanding:

1. You can switch between 1 and 3 with the clutch while moving but you can’t switch from either of those gears to any other gear without stopping. 

2. You can switch between 2 and 5 with the clutch while moving but you can’t switch from either of those gears to any other gear without stopping.

3. You can switch between 4 and 7 with the clutch while moving but you can’t switch from either of those gears to any other gear without stopping.

4. You can switch between 6 and 8 with the clutch while moving but you can’t switch from either of those gears to any other gear without stopping.

I wonder how the top shaft got smoked if he used the clutch between every shift as he claims? Maybe that obscured oil passageway was enough by itself but someone in this thread or another of my threads seemed to indicate that the top shaft looked like it was in bad enough shape that the low or even no oil flow would not account for the damage observed.