Ok...gave my friend two options. Either take off the valve cover, reseal and use new screws or try to extract. He ended up going that route so we drilled a tiny hole and used the smallest ez-out extractor. Worked out alright and we ended up just replacing with a new screw. I guess crisis averted for now.

But definitely sketchy and wonder why previous owner messed with that screw to begin with. He must have tried to tighten but then broke off the head as I don't think the breather valve cover gasket has ever been replaced. It looks stock to me, but who knows. Maybe the previous owner did replace the cover and broke it off during installation? Not sure how to tell if it's still the factory seal or whether it's been re-done. If it was re-done it was done very well.