I would.... On top of one of the axle tubes, fairly close to the center section. Don't EVER put one in line with the ring gear...
Scott, I always thought that the vent hole was so that the expanding fluid (diff oil when it gets hot) did not cause the air pressure in the diff to be so high that it could force oil out the shaft seals. It is important enough that when the serious 4x4 guys are worried about water getting into their vent, that they route a rubber tube from the vent up the fill neck to the highest point they can, instead of just welding up the vent. The vent is usually at the very top of the diff case. I could be wrong, and I am sure someone on this board will let you know if I am, but there is my two cents.
Friction causes the whole rear end assembly to heat up. when the air inside gets hot it expands and the pressure either escapes out a vent or it blows 90wt out past your weakest axle seal all over the brake shoes causing that wheel to lock when applying the brakes and tossing the vehicle a lane and a half sideways when just trying to slow down from "freeway speed". Been there, done that, glad the guy next to me saw me coming and parked it in the emergency lane on the roadside rather than tangle with it.
In a land far away I like axle vents as high as reasonable, and somewhere in the axle tube. Near a suspension link/mounting point was always nice. I have rolled as many times as just about anyone on this board(not something to be proud of). As long as the vent is well above the center line of the gear oil level it should be fine. Most MFG's used a vent seal, that had a smal spring loaded cap on top of a axle vent, so that when the axle reached positive ventilation preasure the spring would let the vent open before the seals would fail.
I drilled a hole about 3" left of the top center of the differential housing. Tapped it with 1/4" NPT, then threaded in an Oiler Cup used for oiling lathes and other machinery. www.gitsmfg.com
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