What is the function of the this threaded hole on the crankcase?

That's where the oil pressure control valve went in the dual-relief cases. You obviously have a late GB or GC case, '75-'76, where it was deleted.

I've heard these cases are sought out for performance builds, because the oiling to the head is improved because the oil pressure can go higher at high RPM. I've also heard of people who have them in their cases replacing the spring with a rod, which effectively eliminates the function as well.

I've also heard that it was eliminated to ensure adequate oiling with hydraulic lifters. I'm skeptical of that, because Porsche never used hydraulics in their Type 4 cases, and VW didn't until '77. I doubt they would make the case compatible 2 years before they needed it.

One source states that it was set to limit pressure to 48 psi with hot oil. If that's the case, it's possible it wasn't doing much in the first place- if you use the old rule of 10 psi per 1000 rpm, you'd be up to 4800 before the plunger started to move, and soon after you'd be at redline anyway. Who knows except the engineer who wrote the ECO?

I also have a late GC case without the valve. If you had the valve, there would be a socket head screw, double square I think, with a sealing ring under it. Removing the screw would reveal a plunger and a spring, similar to the ones at the front of the engine that are used to bypass the cooler and filter, and provide some regulation of pressure in the galleries.

The case is a GA case, I have the plug for that hole, it is a star socket. So I should plug the hole and forget it? There was nothing at all inside that hole.

This picture that Brad posted of that bad ass motor answers my question, the plug in this motor is the same one I have for my case.

There is a spring and a 'piston' that go in there. If you leave them out you will have no oil pressure. I'll find a picture...

Here is the best picture the PET has to offer...

Oil Pressure Relief Piston is on the left
Spring
Copper Crust Washer (in the gasket set)
Star Socket Plug on the right (you know you can use a 3/8" extension with no socket on this part, no special tool required)

That picture isn't very clear, the piston and spring that would go into there would have to be small. Are these parts available for this setup? I have some pistons that do fit in that hole, I also have some springs that are smaller then the piston relief in the front of the case. I'll have to see if they fit, they probably are the parts I need to set this up. Mark in that pic does the piston have a slot in it?

This is what I have, looks like the smaller spring that I have is to wide, won't fit in that hole. The top part of the picture is the setup for the front, the bottom, I think is the setup for the back section of the case not sure, if it is then all I need is to find the spring that goes into that hole.

You're missing the spring for the side. You have the bottom spring, but you need the other one.