Peter,
you say oil is entering the air filter via the breather AND the pcv valve.
The pcv valve should have a hose connecting it to the intake manifold, below the carburetor. there shouldn't be a connection between the air filter and the pcv valve.
the pcv system removes a constant, small amount of gases from the internal engine, using intake manifold vacuum to draw the gases out of the crankcase, and processes the gases through the internal combustion process. the gases removed by the pcv system are replenished with fresh filtered air drawn through the breather.
Reading your post, I am under the impression that your pcv valve is connected improperly.
George
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