Makes me wonder too, everytime I wipe the stuff off!! A little background on my bike is that I started off new, with th 96 motor, tuner and SE air cleaner. Then went to a 106 because (long story short) the dealer shop didn't get the message I wanted a 103 to begin with. Anyway after about 3K miles I was blowing smoke out the left side muffler. Turned out it had something to do with the rings, dealer never said exactly what. Stayed with the 106 and basically new top end. about 7K later decided to dyno tune ping out of it and eventually decided to drop auto compression release and SE compensator in as well (different dealer in town) and they called to say there was ring problems. Turned out S&S said the ring lands were not designed well and they replaced the top end again, but at least this time I knew what had gone wrong. Went with 103 this time for future bore options. I wish I could remember when the blow by started, I think it was probably sometime during the first 106.
As far as the valley drains,I drilled them out bigger as the Doherty Mystfree kit suggests. Still no help, the O rings slowed the blow significantly but not completely.
Now you know most of the story
kt