You are essentially correct. When you say smoking, I understand you to mean that it is comming out the exhaust. So, blow by is really comperssion and or combustion blowing past the piston rings. When this pressure blows into the crank-case, the pressure has to go somewhere. So in this case, out the valve cover breather tube.
Some pressure will always get vented out the breather tube... that's why it is there. However excessive pressure will carry with it some oil (from under the valve cover) on it's way out. Then the oil gets sucked into the intake and gets burned and comes out the exhaust as black smoke. So, when you disconnect the hose, no more oil is getting sucked into the intake.
There could some other causes, but this is the fastest and easiest one to check. Once you've checked the breather (valve cover) hole with the hose disconnected (engine running) we can go from there.