Obviously if you are using a pressure bleeder, the blake fluid resevoir would be capped off by the bleeder. In the past I've always left the cap OFF while bleeding via the 2 person method. Is this cap suppose to be ON or OFF while bleeding? Does it matter???

You should leave it off or just set it on top of the opening without threading it down. This allows the pressure to equalize (easier). Setting the cap on top will prevent anything from falling in.

really, I kept on putting the cap back on. Kinda defeats the whole purpose.