I keep looking at your diagram and the pics trying to figure it out. Just guessing here but, It looks like it might be some sort of pressure relief bypass? That piece you are holding in the pic, does the black part turn, like a regulator? Weird.
On a boat with water injected over-the-transom (OTT) headers, plumbing usually goes: off the jet you’ll have a shut off valve, gate or ball, to a tee and that tee feeds the front of the block the 2 water pump inlets, water circulates thru motor, comes out 2 hoses connected to tstat housing, 1 goes out thru the hull dumping cooling water(dump line), the other line feeds a Bassett tee valve that tees to the header injection. The Bassett tee valve has a ball and spring inside to restrict water to the headers at idle. As you accelerate, the jet increases the pressure in the cooling lines and that pushes the ball and spring allowing water to be injected into the headers.
That’s the basic routing for injected headers. There are valves and regulators that can be added to build or relieve pressure.
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