Yes, it is consumed.
In the PHB 152 it is described what happens when a part of the floor is drenched with oil and lit (emphasis mine).
You can also pour a flask of oil on the ground to cover a
5-foot-square area, provided that the surface is level. If lit, the
oil burns for 2 rounds and deals 5 fire damage to any creature that
enters the area or ends its turn in the area.
What it is not told is what happens with the oil on the creature. Logically one may say that the oil would burn for 2 rounds mimicking the mentioned effect. But there are plenty of evidence that fire does not stay in creatures unless specified. For example; Burning hands, Fireball, Delayed Fireball, and Meteor Swarm are spells that clearly specify that no worn objects catch fires, and one of these is a level 9 spell; a mere oil would not light a candle to that. Furthermore, the text ends with a full stop where it should state something in the lines of "every round for two rounds", or so.
It ignites flammable objects in the area that aren't being worn or carried.
If the target takes any fire damage before the oil dries (after 1
minute), the target takes an additional 5 fire damage from the burning
oil.
It is important to emphasis that flammable is also a description of oil.
I realized my comments were better suited as their own answer.
You are absolutely correct that a hooded lantern would be visible in the dark from any distance. Assuming you had direct line of sight on the lantern.
So if you are in an open empty field, or a very large open cavern, then you are right...there's no point to a hooded lantern.
However, you can only see light if you have line of sight on it. And, when seeing 'light' there are two things you may be seeing. You may either be seeing the source of the light (the lantern) or you may be seeing the area illuminated by the light.
So, where this becomes useful is in areas that do not have clear, long-distance visibility. Such as in a building, or a cave, or a forest, or city streets, or literally anywhere that is not an open field.
The way this works is this: If you have a hooded lantern and you have the hood up, you are casting a Sphere 60' aura of light around you. In an area with corners, doors, or any other obstruction that blocks line of sight, this means any creature that can see any part of that 60' radius aura of light...can see your light.
However, if you hood the lantern, that drops it to throwing off a radius 5' aura of light. Bearing in mind that spheres include their origin as part of the radius...this means that only the single square that the lantern is sitting in is illuminated, with a bit of bleed-over into the neighboring squares. This means that unless a creature gets line of sight on the squares immediately around the one the lantern is in, they cannot see the light.
There are several practical uses for this. While dungeoneering, the party can dim the lanterns to sneak up to a corner. If each party member carries a lantern, they can each see where the other is, and see the ground under their feet so they don't trip or anything...but no one around that corner can see them coming, because none of the light created by the lantern reaches around the corner to become visible. Then the elf sticks their head around the corner, using their Darkvision to see what's there...all without ever showing any light to the creatures around that corner.
On the other hand, if you wanted to try the same trick with a non-hooded lantern, the party members that can't see in the dark would have to stay 60' away from the corner, so that the light created by their lanterns didn't go past it and reveal their presence.
So, in summary...
Yes, a light is visible from a tremendous distance, IF you have line of sight on the light source, or anything the light source is illuminating. In an open field, this means dimming your light doesn't help much. But in an area with obstructions, dimming your lantern means you reduce the aura that is visible in the dark from a 60' sphere, to a 5' sphere. And given that this aura can shine past corners, under doors, through windows, and so on....reducing your light aura is very useful in areas with obstructed vision.
Best Answer
Fast hands would not work, but per the two weapon fighting rules:
Also, per the improvised weapon rules:
And a club is listed on the weapons table as a light melee weapon. However: a club is two pounds while a torch is one pound (if desired, this Q&A illuminates using a torch as an improvised weapon).
Avoiding the brilliant pun of a torch clearly being a 'light' weapon, you might instead get the bright idea to ask your DM if you could just use a lit table leg as a torch ;)