Nope, it is not a timing retard and it is not temperature sensitive. This what you're showing us is a distributor vacuum advance control valve used on certain CAP applications from 1963 (prototype CAP cars) through 1969. It has three vacuum nipples: a large one to manifold vacuum, a small one to the vacuum advance port on the carburetor, and a small one to the distributor vacuum advance. If you pop off the black plastic cap, you'll see there's a spring underneath and a slotted screw running thru the center of the spring to adjust the tension.
What this valve does is advance the timing under closed-throttle, high-vacuum situations (i.e., deceleration or coasting with your foot off the accelerator). The way it works is simple: as long as the vacuum signal from the manifold vacuum port is equal or less than that from the spark advance port, the distributor vacuum advance receives an ordinary ported vacuum signal as though the valve weren't there at all. When the throttle is closed, the spark advance port is above the closed throttle plate, so it produces no vacuum signal. But manifold vacuum is very strong under the closed throttle plate above idle speed; this strong manifold vacuum overcomes the valve's spring tension and manifold vacuum is sent to the distributor vacuum advance. This advances the timing. Why? Because with closed-throttle coasting or deceleration, you've got a relatively rich, slow-burning mixture headed into the cylinders; you're hauling fuel through the idle circuit of the carb with the ultra-strong manifold vacuum, but because the throttle plate is closed, you haven't got much air coming in. Advancing the spark under those conditions gives more time for the mixture to burn, thus reducing emissions. It also increases fuel economy. It also reduces engine oil contamination. It does not take any bite out of performance or driveability, nor does it have any other detrimental effect.
The valve must be adjusted properly; if the spring tension is too loose you'll get vacuum advance action at idle (by manifold vacuum overcoming the too-loose spring). That will louse up your ability to set the idle mixture and speed for a smooth, stable, clean idle. If the spring tension is set too tight it'll be as if the valve isn't there at all.
Read more
here (Popular Mechanics November '63 discussion and test of the prototype CAP) and
here (1967 Chrysler Master Technician Service Conference booklet on the system with detailed explanation of the distributor control valve —*keep reading onward; starting on page 10 are the check-and-adjust procedures for the valve).
Note that you can turn this piece of hardware to your advantage by advancing the base timing from the retarded CAP spec. I don't recall what the CAP and non-CAP basic advance specs are for a 273 in '66, but it'll be something along the lines of 5° BTDC for non-CAP and 5° ATDC for CAP.