Broken piece in my engine..

Ok so I know I'm dumb for not knowing what this part is, but I know one of you fellows here will help me out anyhow. It is broken I know that much. Could this be the reason my engine has exhaust coming out of the oil cap and the dip stick?
Thanks in advance for any advice.

Yes, that is a jet valve, supposed to let air into into the cyclinders to induce swirl into the intake charge. If its broken then i can see it letting out exhaust gases.

ok so I just ordered the eliminator kit from silver seal.... I'm supposing this really doesn't make the engine run better or worse?

It's in there for idle/low rpm emissions and stuff. From reading on other forums people haven't really noticed any major difference, nor has anyone failed emissions just from removing it. I'd wager you'll be fine.

cool I got the head off today and the cylinders have been sleeved and look like they hardly have any wear at all. I am assuming somone reringed the thing trying to fix the blow by problem, but missed the broken jet valve. ..

So just a short blurb on jet valve eliminators. . . They can fix major problems. If you are experiencing a lot of blow- by, check your jet valves before you let someone convince you that you need rings. You may save yourself a lot of money and work. I am happy to say my 85 now runs like a champ with only a small oil leak in the rear main. But I can live with that...