Speaking from recent experience, YES the master cylinder needs to be vented. I rebuilt the airpack (was cruddy so a good idea), checked all the wheel cylinders, flushed and bled the system and the da*n brakes still did not operated properly.
Rewind to the fact that the previous owner recently replaced the master and left the solid plug in the top (loose fitting) and forgot to tell me he moved the vent line. So I screwed up the brakes when I STUPIDLY did not think and closed up the top of the master cylinder TIGHTLY.
Drove great and stopped great for about a minute until I created a vacuum in the master, the dust boot sucked in and I almost took out the UPS guy because the pedal went hard as a rock!
Long answer and a learning lesson at the same time.
73 M35A2C now with brakes and for sale.
Don