The gas leaks out of the barrel, and the leaking sound actually stops if I plug the barrel with my finger.
I'm happy to report that the leaking stopped after injecting some silicon oil and putting another 60 or so shots through it. The problem did not stop abruptly...it tapered off, as if it were getting through a break-in period.
The hop up adjustment screw was another interesting thing... It seems that it has to be nearly all the way unscrewed to give a flat trajectory, at which point it's probably wise to take additional measures to prevent it from falling out during a game (such as e-tape over the screw or teflon tape on the screw). The hopup also took some breaking in before it shot strait, but it shoots quite nice after the break-in!
I think if I could do this over again, I'd wait until the next generation of the PPS Mosin Nagant... but I suspect I'll have plenty of fun with this one too.