And since all land vertebrates are descendents of fish, and you can't evolve out of a clade, whales actually are fish.

Oxygen levels wouldn't be a factor. The "need high oxygen levels for large size" only applies to invertebrates with very simple breathing systems.

If trex had similar type of lungs as modern birds, they would do just fine. Bird lungs are super efficient (much better than mammals' puny blind sack lungs) that enable them to fly at high altitudes.