From Tim's website


1954 261 Positive Crankcase Ventilation System:

http://www.1954advance-design.com/Documents/EngineeringFeatures/slides/orig_Page58.html

http://www.1954advance-design.com/Documents/EngineeringFeatures/slides/orig_Page61.html

Per the link above the line from the top of the valve cover would run to the air cleaner

Can you post a pic of your engine?