I considered using that hole. I think it's just like a freeze plug that's used to block it off. It does go back to the pan. Problem is, I don't think it's threaded, and it's a big hole. I figured I'd have to thread it, which is a whole other issue with the shavings getting into the pan.
Then I was reading Four Wheeler this weekend and there's an article about the Walker Airsep for 2nd gen trucks. Included in the Airsep kit is a redesigned turbo return line with an integral drainback to route the oil collected by the Airsep back to the pan. I'm thinking of phoning Walker and asking if they'll sell me just their redesigned turbo return line.