Chuck,
That looks like the oil pressure sending unit for you dash oil pressure gauge. A easy way to verify this is to take the wire off of the terminal, and if I am correct, the dash gauge will stop functioning.
The reason that your Aladdin reads 55 PSI for oil pressure is that you engine has the type of oil pressure switch that you described, and it is the only one that the Aladdin can read. So if there is enough pressure to close the switch, it reads 55 PSI, and if there is not enough pressure to close the switch, it reads 0 PSI.
Gerald