When I restored my CJ7 I ran a common vent hose from both axles, transmission and transfer case through the right frame tube and up to the air cleaner.
I don't 'Restore' anything with the 'Jeep' name on it!
Anyway, when I ran my vents together,
I ran the transmission and transfer case in with them,
Use a Honda Quad CV joint boot to seal up the top of the transmission, drilled/tapped it for a nipple, and now when in deep water, I pressurize the axles, transmission, transfer case, ect so water can't get in.
Came in real handy in the floods last May/June when they asked us to 'Rescue' the old folks and others from the flood waters here!
I had water OVER my dash, and I expected to be buying stock in Valvoline from the amount of fresh gear oil I figured I'd be needing....
But much to my surprise, NO WATER IN ANY OF THE RUNNING GEAR!
Can't say that about three of my gauges, and someone stole my chainsaw, but the running gear was PERFECT!
My guess is that it's oil that got thrown up into the tube by the ring gear, although I still can't understand how it got over the high spot in the frame.
VAPORIZE THE OIL (oil vapor) from heat/slinging in the differentials, and it just condensed/collected on the inside of the tubing, and ran back down to a low spot in the frame....
I'm amazed at the smart guys here that don't know oil EVAPORATES and re-condenses!