[donut]

It's the air inlet for the PCV system. Providing your PCV valve is working correctly (and the engine is mechanically sound) that should be an inlet, the PCV should be evacuating the rest.

Should it be that way, not really, though I can't remember an OEM 305 I've owned that didn't do this to some extent. (iirc usually valve guides, but it's been a while)

Your modulator leak, if it's drawing fluid up the vacuum line, should be burning it in the engine. (smoke out the tailpipe)