As the pistons rise and fall, yes they do compress the air in the crankcase, that's how a 2 stroke engine works and is the reason for the 4 stroke's crankcase breather in the first place. Crankcase pressure on a 4 stroke can get pretty high; back in the 80's and 90's Husqvarna/Folan engines as used in Husabergs etc used one way reed valves in the oiling system and relied on crankcase pressure to push oil to the top end, for instance.
For a 4 stroke to have twice the volume of air coming from the breather than it does the spark plug holes, it either has 1) a compression leak into the crankcase or 2) it's not drawing in enough air to properly compress in the cylinders which points to a cam timing problem or even valves adjusted way too tight. Of the two, this is more likely.
Improper cam timing won't change the volume of air from the crankcase but it most definitely can change the volume/pressure being shoved out of the spark plug hole. At kick speed, an XS should have, what? 140-150 PSI compression? Even if it's as low as, say, 100-120 PSI that should still make for a pretty sharp snort from the plug hole.
The only way for air to get from the cylinder to the crankcase is either through poorly sealed rings or a bad/not sealing head gasket (that would allow compressed air from the cylinders into the cam chain opening between the cylinders). That would probably be felt as pulses, since the leak would be worst on the compression stroke and at kickover speeds that should be pretty apparent.
The way to settle this for sure would be a leakdown test: if air is applied to the spark plug hole with both valves closed and a lot of air escapes through the breather or dipstick hole, it's a ring or head gasket problem. If the amount of leakage is below, say, 15% on a new engine it's due to the rings not being seated. If the leakdown is below this, then the rings are sealing OK as are the valves.
If a leakdown test is done with the valves both closed on the compression stroke and air escapes from either the intake or exhaust port, then the valves are not seating properly.
A really dumb question on my part, due to the mention of TCI: when I was assembling my bike it looked like it was possible to easily flip the cam 180 degrees left/right. In that case, yes it would look like it was timed correctly but in reality, no. Can someone verify that for both me and the OP?
http://www.650motorcycles.com/CamTiming.html