Don't get your nickers in a twist Dave, remember that Rob has a completely different engine than do you. And anyway, I suggested the possibility of bad valve guide seals in my initial reply. Subsequent mention of condensation and emulsion was posted to hint that puffs of oily condensation might also be mistaken for oil fumes.
My response to you was was an attempt to explain how the "breather" works on Rob's FeiDong 495 engine. I've got the 3 cylinder version of the same engine in my KM454, so I think it's fair to assume I've got the same breather/fill cap. You said clean/replace breather, I merely attempted to explain why that particular suggestion was not applicable to Rob's (or my) engine. Note also I specified that Rob's breather/fill cap is 90 degree side-mounted on the valve cover. I assumed you'd understand that meant it takes considerably less oil accumulation under the valve cover for oil to get into his breather/fill cap than would on a top mounted breather.
And I made absolutely no allusion to water in the cylinders, so let's not go down that street right now - ok?. I merely stated that moisture accumulated under the valve cover will puff out the breather/fill cap in the form of (white) condensation, similar to the way white smoke (condensation) puffs briefly out of a cold muffler. And that moisture from any source will also cling to the inside of the valve cover - and inside the breather - in the form of emulsion. I wipe that crap outa mine every time I add/change oil
So miscommunication aside, we both actually are recommending that Rob consider the issue might be related to valve guides. As an after-thought, plugged oil return port(s) could cause the oil level under the cover to rise as well. In either case, I'd take the valve cover off for a looksee
//greg//