Two and a half quarts!?

Holly Molly! That is more than 2,3 liters!

The right amount of oil in that engine is close to half of that.

This rubber pipe that goes from the crankcase to the "cylindrical piece" is simply engine breather. Direct this hose upward and tuck it somewhere under the seat, where is dry.

Your second and third issue is related to carburetor. To me, it looks that you are still a noob on this subject. It is quite a task for me to do some serious writing about carb tuning on English, so I could recommend you to find more materials about carb tuning, to be 100% sure what is happening, to and what to do with it.

But no matter what, I think that 70 mph is, give or take, max speed for a bike with this engine.