I just can't figure out how it would do anything since when it comes out of the case, and towards the powervalve, it just runs into a dead end, that is unless somebody at the factory forgot to machine mine.
I wonder what would happen if I opened the dead end  up into the exhaust valve body?

It is the tank for the Helmholtz resonator better known as part of the power valve tank.  DO NOT grind it to connect it to the exhaust port, otherwise your engine will behave like the power valve is open all of the time.