i've never had any problems with oily air filters. The two minor engines i have are slightly different though. My original setup had a standard rocker cover, with a breather pipe to the filter housing. So not a closed circuit since air is free to enter through the air filter intake channel.
My other engine had an alloy rocker cover, and a connection between that and the carb, on an additional metal section between the carb and air filter. So i assume this is the closed circuit you're talking about.
I'm not sure which setup works best though, or if there is any difference at all, since when i swapped things over to use my nice shiny chromed saucepan filter, the distributer slipped round a little in it's clamp. The two things being completed unrelated, yet i hadn't noticed and assumed the different filter was nailing performance. It was really cold at the time also, so it seemed reasonable. Until i realised the engine was heavily retarded!
