Oil dripping from the muffler is okay in most cases if it isn't a huge amount. As the oil in the fuel doesn't really burn with the alcohol but rather it separates and lubricates all the parts. This means that oil will acumulate in the muffle due to it's shape, and if the model is placed on an incline oil will drip out. Also, 2 stroke engines spew a lot of fuel right out of the exhaust and some of this accumulates in the muffler and due to the heat the alcohol evapourates and leaves behind the oil. If your engine is flooding them there will be lots of fuel, not just oil in the muffler, to fix this simmply spill it all out of the muffler and keep trying to start it.