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Jim, there are other breathers installed too, on top of the transmission and the transfer case.
It's best to unscrew them and check them by alternately blowing and sucking thru them. They are one-way valves and will open at some low pressure, about 1/2 psi or so, a spring loaded rubber disc...
Jim, the plug on the bell housing is for fording only. It's stored in the boss on the side when not used.
Check the PS magazine section for notes on the breather valve maintenance. Discharging oil is not a normal function.
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