What is the short/large air line coming from the passenger / back side of the valve cover used for? Should this be capped off?

 

Not unless you want alot of positive crankcase pressure.

 

you can put a crankase breather on it

 

It helps the other hose on the other side that goes into your intake (PVC) Flow. it collects air from the intake at that spot because it is already filtered. It needs air flow. Some people put small filters on it. They sell them anywhere.