Will the engine breathe properly with it set up that way?
The short answer is "no". A PCV system needs two holes, one to let air into the engine, and another for the PCV valve to draw air back out. The original engines that used that manifold had a hole in the block back beside the distributor and a baffled canister under the intake that allowed air to be vented through a breather tube beside the bellhousing. That system stopped being used with the 2nd-generation 327's in about 1965 or so, I believe. Those engines could be converted to PCV by installing an adapter in the block to eliminate the road draft tube and attaching a PCV valve to that port. The small tube in your photo was used with a sealed oil fill cap to draw air from the underside of the air cleaner.
If you use that fill tube nipple to connect to a PCV, you're going to need to vent the passenger's side valve cover to let some air into the engine. Just drill and tap the top of the cover for a pipe thread to hose nipple fitting and run at least a 3/8" hose to the "clean" side of the air cleaner.
Jerry
