distributor modulator system

It's commonly called a Dist-o-Vac, and it controls the distributor vacuum advance based on temperature and engine RPM to reduce emissions. I don't know how much it would affect performance if you disconnect it, but here's a link that shows how it should be hooked up and how it works:
http://www.autozone.com/servlet/UiB..._us/0900823d/80/1c/36/e2/0900823d801c36e2.jsp