That breather is an open system. Anytime the engine is working hard, the PCV system may be overwhelmed. When this happens, the breather starts working in reverse, and vents the blowby gasses. This is normal operation. If it didn't work like this, the pressure would blow seals out and dipsticks.
Later model cars had a big hose venting those blow-by gasses into the air cleaner to prevent the mess on the valve cover. This was called a closed system.If you don't want to convert, you can still use the later breather with the nipple and route the fumes down beside the engine and terminate somewhere out of the path of flying road debris.... so that when the PCV is sucking, it doesn't suck gravelnchit.
As to the source of the fumes, that's another story. It could be rings, or it could be more serious... or it could just be stuck oil-rings. That's kindof common with engines that have sat for long periods. You could try a conditioner.
But if it smokes at idle, and the PCV system is known to be working, then there is something seriously wrong. I would pop that PCV out of the grommet and with the engine running, take it right out of the hose. The engine should immediately stall. If it doesn't then that hose may be coked up so pull it off the carb. Now it better stall. But if it doesn't,then pull the carb off and make sure you got the right base-gasket installed on there.
But if it passes the stall test then install a new PCV.
If it still smokes at idle, with the now proven to be working PCV system, AND conditioner having been run thru the engine, then a compression test is next on my to-do list.
