Hi Chris
It's good to hear that you solved the problem.
As the owner of a 70 model with welded crankcases, my story may interest you.
I bought the bike as a basket case in 1983. Amongst a lot of problems I faced, the crankcases were in 5 pieces. I had never restored a motor cycle before, but I saw it as a test of my skills as an amateur mechanic.
Local bike shop owner Brian Clarkson knew a very good welder named Kiwi. He did the job well. I had to re-drill the oil drain to the timing case as one of the welds went through that hole. The barrel face of the cases was good, but I noticed a large gap between the halves at the top rear. I fixed it by aralditing a thin piece of aluminium there and filing it to blend in. Don't laugh, the only oil leak on the bike ended up being a slight weep from the kickstart, which I fixed by fitting a thicker "o" ring (metric 25 x 4 mm). I didn't use any sealing compound anywhere on the bike, except of course between the crankcase halves. I never gave much thought to engine breathing at the time, although the small size of the timed breather ports seemed strange.
I used the bike regularly for some years but then it languished for a lot of years until in 2010 I decided to celebrate its 40th birthday by using it again.
But it punished me for neglecting it by refusing to run. So I stripped it right down again to do the job on a better budget this time. That was when I discovered this forum and got to thinking about those small breather holes.
In the end I chose to do the timing case breather mod, but not to route the outlet to the oil tank. I just don't like the idea of having the engine breathing into its oil unless it's necessary, and it didn't seem necessary with timing case breathing. It breathes through an XS 650 reed valve and then into a home made catch tank which nestles into the plates between engine and gearbox.
That allowed me to use the original engine breather port on the oil tank as a vent to atmosphere, and to plug the tube that lets oil drip into the air filter.
So far, albeit with only low miles on this setup, there has been no oil in the catch tank.
Cheers
Martin