Lunar oxygen as reaction mass

The discovery of water on the Moon seems encouraging for many reasons.  Among them, there would be a way to make fuel on the Moon, as opposed to bringing it from Earth, which is expensive.

It has occurred to me that even though there may appear to be plenty of water available on the Moon, that better uses of it could be found.  Before long, with overuse of this resource, you could find yourself back into the position that you were in before.  Water is too scarce.  It needs to be preserved.

But there is a lot of oxygen on the Moon.  If there was a way to utilize that instead of burning hydrogen and oxygen together for thrust, then the fuel problem could be solved.  The question arose, why not use oxygen instead of hydrogen and heat it up as the reaction mass?  It would be the same concept as  Parkin's , but instead of hydrogen being heated up by microwaves, do it with oxygen.  Perhaps this isn't a good idea because oxygen is so reactive.  But if a way could be found, then here's the way off the Moon.