The breather element inside will likely be crumbling, I replaced mine with scotchbrite, others have used similar materials or lawn mower air filter media. Anything that air can pass through, but oil might stick to. Check the rubber drain hose, it is closed on the bottom and opens to drain when you pinch it.
It works pretty much like you mentioned.
(Caution; old man story to follow)
Earlier models just drip on the road, I have noticed in old pictures of the highways there was often a black strip down the center of every lane due to road draft tubes dripping oil. In the 60's we were warned about riding motorcycles in the oil on center of the road. It occurs to me we don't see that much since cars got better.
Welcome GurgleMurgle, the F0/F1 is my favorite. My F owners tip is to keep the brake fluid fresh to maintain those disc calipers and master cylinders.