Correct. It is a cone shaped filter in the bulge just over the valve cover. Not a bad filter, re-usable and replacements are not expensive. I have been thinking the same thing, I looked at a few sites online that sell the exact same pre-filter but for tractors and they are super cheap. Not sure how well a 7" will fit in that spot, but I am pretty sure we could make it fit!
This one looks promising...only 5.59" Diameter...hmmm. (
http://www.tractorpartmart.com/us/top-spin-pre-cleaner-p10124.html) and only $42 bucks!
Honestly, the only one I can really think of is the noise? The hole in the firewall is cut directly in front of the opening for the airbox intake under the cowl. All the TB noise is basically transmitted into your cabin...muffled yes, but still louder than before. I have a modded TB on my XJ. It is a 62MM bored out one from Leigh Performance Machine (Stroked Jeep .com
http://www.strokedjeep.com/) and there is a bit of "whistle" at certain throttle positions under certain load conditions. My wife was annoyed by this, not the growl. A stock TB should NOT have this issue at all.
And yes, water ingress is possible, less possible if the hole is on the passenger side because of the bulkhead in the cowl and the non-opening vent (fake vent) above that side. If water is going in your intake, your interior will also be getting slammed and everything under your dash. Big problems.
So far my fav part is the space for the 2nd battery and the cleaner filters.