I have that same engine but have not had this problem (yet). However I agree that the rubber fittings, including the rubber pads, that Lionel uses on smoke unit fill opening parts will deteriorate (and in the case of the pads pretty quickly). The O ring on the plug on this engine should not be hard to replace. I have not checked whether Lionel list it as a separate part but in any case a substitute should be relatively easy to find on Amazon.
I also agree that it looks from your video that there is a lot of back pressure forcing the smoke vapor back towards the fill hole but that is common with Lionel whistle and other accessory smoke features that use tubing to connect the smoke unit to the fill point.