I'm new to four stroke engines and was wondering how is the pressure nipple on the rear of the engine plumbed? Does this go to the muffler or atmosphere?

It depends on which engine.
The nipple is an oil vent that vents the oil from the crankcase. Saitos vent to atmosphere - some models in other brands have a connection to a low pressure point in the exhaust or to an inlet point on the carby.

What Brand and what Model engine do you have?

Generally to the atmosphere. Those engines with lines to the carb manifold have their vent up front near the cam shaft area. Lot's of folks run a fuel line from the vent down to the landing gear and use a tie wrap to hold it in place. Otherwise the firewall will become coated with oil residue vented from the crankcase.

Good luck,

Cheers,

Chip

The engine is a Saito FA100 GK. So I can just run a line to the outside... correct? Thanks for your help.

Yep - just run it to the outside.
As Chip said - most will run a line down the landing gear be careful when you do that you don't pinch off the line with the tie wraps.

Also you mentioned that you are new to 4 strokes. If this is a new engine beware that the GA100 Saitos vibrate - A LOT - especially when they are being run in on the rich settings. Because of the vibration issue on that model, I won't buy any more of that particular model now that the 1.25's are out. Once they are run in and tuned properly they are not too bad but they do still tend to vibrate a bit more than some other engines. The last 2 that I have bought I have done all of the run-in on the bench so as not to shake the airframe apart. (With most engines I normally do the last bit of the run-in on the airframe as a test of the electronics).

It's not a major point but I would like to point out that the oil vent line should probably not be longer than 2 inches. The reason being that the crankcase "breathes" with the up and down motion of the piston. If too much tubing is used the accumulated oil will be sucked back in. On my Saito's I have found that a long line causes the oil to exit the front of the engine and is sprayed back over the cowl and or engine by the prop. For that reason I have decided to just let it drip below the engine and clean it off the bottom of the plane.

You can safely run more than 2 inches of line from the vent on Saitos. You can run enough to have the line exit the cowl or engine area. Some engines leak out of the front bearings.

I ran my Saito .56 with the vent tube plugged twice the other day by mistake. Didn't blow the plug out but sure did blow fuel out of the front a lot.

I think that was my point.

Had a friend at the field with about 14" of medium fuel tubing to keep his plane clean on an OS 48 FS; would not run properly till he cut it down to about 6".

Because of the blow buy the net average pressure of the up and down cycle is not 0. You can safely run the line as long as you want. If over a few inchs you will see oil slugs that pulsate back and forth, but they move back more than forth, and after a few seconds exit out the tube.

Length is not that important. There is an overall positive pressure in the crankcase because of the blow by gasses. That's where the lubrication comes from. I have used as much as three feet of tubing on the breather just to check this very thing. The oil always comes out of the tube because of that positive pressure. Most of my 4 cycles have about 6 inches o tubing connected to the breather.