I believe quality varies between each brand. I'm not familiar with oz-pet, but we have many other brands of wood pellet here, some are really very very cheap, but I bought the more expensive ones, but they last a long time and average out to be about $3+/month.
I haven't tried the cheaper ones, but I have just started switching to another brand, which costs a few $ more than what I had been using. Didn't have the problem you mentioned, been using it since beginning of Nov. It is lighter and smaller and my boy finally covers his poo well with this new smaller pellet. I am happy with it, my only complaint is, I thought it didn't smell like pine, smell sourish, smell like my antimicrobial wooden chopping board. Oh well, if my cat and hubby is fine with it, I'll have to bear with that smell, I just have such sensitive sense of smell.
Try a different brand if you can find one, the sawdust shouldn't turn into sludge, even on the few occasions when wee seeped through, the sawdust below just absorb the liquid and its just wet sawdust.