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the biggest draw back that you will have to check first is the ratio of the diffs you want to change. If they are not the same but will fit then you will destroy the 3rd diff in the transmission from excessive use.
The engine produce little oil steam when is at normal temperature, this is normal.
This steam goes to the air cleaner for recycling.
Now, the reasons to see oil dripping from the air cleaner are:
Engine oil overfilled, or engine breather valve( if fitted) faulty, or the piston rings causing the pressure to scape into the oil sump ( this means engine damage).
get a technician to chem it.
You have a fuel level sending unit that is not working properly. It is located inside the fuel tank.
Also, when you ask for help with your vehicle it would be very helpful if you could mention WHICH "Legacy" we are talking about. It seems that Subaru got "stuck" on the Legacy name - there are actally 9 choices for "Legacy" just for your model year. (see list below) There are also 2 different engines available for that year a 2.2L and a 2.5L.