That's the breather mounted on top of the transmission control valve case, correct ..? Does the breather start blowing oil as soon as you shift into gear or does it take a few seconds..?
Sounds like there could be a seal blown in the control valve assembly at the top of the transmission. It would need the cover plate taken off for a look-see. Maybe the oil drain from that area back down into the main transmission case is restricted. Does the transmission work fine, clutches not slipping, slow to engage gears, anything like that ..?