"---upon closer inspection it is leaking into the distributor cap"
Sounds like the rotor shaft seal has failed. The distributor on the 1FZFE is difficult to take apart compared to most other Denso distributors, you should consider it non-serviceable IMO. Most distributors IME have a pin or clip that allows you to easily pop the rotor shaft out, pull the bearing and seal off, and put it all back together; easy peezy. But the 1FZFE distributor has a pressed on pinion gear which needs to be pulled off the shaft, and there is no stop or step on the shaft to help you get the gear back on the shaft at the proper depth. Also the shaft seal is a highly specific design for this distributor, not available as a separate part. Ditto for the bearing. I spent weeks and dozens of phone calls and emails to all the major suppliers and manufacturers of shaft seals, no one makes the same seal as what is installed originally, not to say another shaft seal won't work, it just might not work as well or last as long as the original seal. The bearing is also a specialized design made by NSK for Toyota/Denso but not available from Toyota, NSK, or aftermarket, however the size is commonly available, there are a few types that should work OK.
Either way, IMO, the most painless route is to buy a lower mileage used distributor, check under the cap first for signs of oil leaking past the shaft seal before you buy it. Or get a new distributor which will last 300,000+ miles. There are aftermarket distributors available for around $100, check Rock Auto.
