One gallon will be enough to quench small blades, but two gallons will be better. If the oil is kept covered and not contaminated with moisture or debris, it will last for thousands of quenchings. I don't know how you can tell if it is bad, besides regular testing of your edges. If something seems to be going wrong with the quench, then one could suspect the oil if it is very old. It probably doesn't hurt to change it every two or three years.
I have some that Bill Moran used and it still is good. He kept it in a three gallon coffee pot (Looks like something out of an old western movie). He would heat it up with a hot bar of steel and then quench small blades in it. I've got the pot,too.
Pour off your oil a couple times a year, to remove the sludge in the bottom of the tank. A kitchen screen strainer works good for this. The other sign to look for would be a burned look to the oil. Darkening is normal to some degree, but watch for black looking and burned smelling oil.
I have noticed that the fast oil will seem a little less fast after it gets some age to it. I pour the fast oil into the slower oil tank when it gets dark looking and fill the fast tank with new oil. This is after several hundred quenches, many on large blades and objects.
