To answer the tailpipe question: the car was designed to have the whole exhaust system; i.e. both the resonator (first muffler) and the muffler. As far as safety from fumes go, it's your call. How long do you sit in traffic on top of the open exhaust, any chance of being stranded in winter and you have to spend the night in the car, etc.

Breather tube routing: again it's your call. You'll find lots of argument both ways by using the search.

Trucks began switching to diesel in the early 1950's purely for economic reasons. Gas trucks got 3-5mpg, diesel got 4-6mpg at the time. Repair costs cut nearly in half over the life of the truck, providing the maintenance was done. Putting the exhaust at the top of the truck kept drivers alive in the sleeper, and was done before the switch to diesel.

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daBenz - 1970 220D