After writing to the great people at Surplus Shed, I've discovered the reasons for the rainbow view through the scope. According to Fred Lamothe, the objective is an achromat, but not for visual use. He says it may have been corrected for some military purpose, but as a scope objective--it's not. Plus my idea of the single-lens eyepiece? Not good either. Put these factors together, and you get Lucy in the Sky with Diamonds, my friends.
So I've asked Fred to help me find suitable lenses. Perhaps if I had done this in the beginning, I'd be taking photos right now through my scope.
Updates coming soon on what Fred finds.