Both of the past-tense examples sound somewhat archaic, but that is to some extent because the use of shall in the present-tense sentences does also, imo. (The use of present-tense may in the second sentence sounds formal, but not archaic.)
Probably the last person I heard use might and should with these specific meanings was my grandmother, who learned English as a foreign language about 100 years ago (literally). If your questions is whether you should :-) use the words with these meanings, I would say no, as it will simply be confusing. To convey the past-tense sense of these, you might have to come up with workarounds:
When he was at school, he was not allowed to go to the bathroom ...
He thought that they would go to the restaurant.
Hmm, that second one is tricky, but it's the result of substituting the non-archaic will for shall in the present tense.
The extent to which we can still call these preterite-present, is that they have present-tense uses for the past tense form. For example, while we can use could as a straight-forward enough (if irregularly formed) past tense of can in a sentence like:
I could run that far when I was younger, but I can't any more.
We can also use could in the present tense.
I could run that far when I was younger, but I *could*n't any more.
Including in forms where we must use could, and can wouldn't serve:
I could really do with a coffee right now.
Remember, that can and could are forms of the same word. You said "I don't see how can, will, may and shall express a past action or state", and the answer is rather than the past tense of those words—could, would, might & should can apply to the present tense.
Now for the history bit!
In Old English there were two main forms of verb; strong and weak. They differed in terms of how they were inflected for person, tense, number and mood. Indeed, we still have the legacy of this in Modern English, so some people still use the terms for Modern English.
A weak verb would change tense by having a set ending added to it. This is the case with most Modern English verbs (walk → walked, watch → watched, auction → auctioned).
A strong verb would have a change in vowel to change tense and sometimes mood. This is still the case of some of the Modern English equivalents (ring → rang/rung, bite → bit/bitten, come → came, shake → shook/shaken).
Because there are relatively few strong verbs in Modern English, many people don't use the terms weak and strong about Modern English, but just regular and irregular, considering all the remaining strong verbs as special cases.
The two also differed in how number and person worked with each type. There was a third class that would act like the strong for the past tense and the weak in the present tense, in this regard.
The fourth class were the preterite-present verbs, where a form you would normally have with a strong past tense, was used in the present tense, and then the other inflections were done as if they were weak. So for this reason, they had some qualities of past-tense verbs when they were in the present. Hence the contradictory name preterite-present.
Old English had many more preterite-present verbs than Modern English. The only remnants in Modern English are the auxiliaries. This was not the case in Old English in both directions; by which I mean that not only where many other verbs preterite-present, but that the auxiliaries weren't auxiliaries in Old English (they also weren't defective, you could say sculan in Old English while the closest translation "to shall" or "to should" isn't correct Modern English.
Willan was neither defective, nor preterite-present, though the modern will/would is both. It was a strong verb.
Best Answer
With the German forms mögen (infinitive), er mag ( he may), er mochte/er möchte (he might) you may get an idea about historical sound changes. The German stem mag/mög has a regular past with -te, but g changes to ch, which is easier to speak before t.
In English g vanishes, but y in may reminds us that there was a g. English might is parallel to German mochte/möchte. But in English the g-sound vanishes and only the spelling gh is a hint at the original g-sound.