I am restoring a webster-chicago wire recorder from 1956. It's in very good shape, powered up, but shorted a 1 Amp heathkit-type plug fuse when placed into run mode. I have new rectifier and 3 additional tubes for it. Basically I am replacing capacitors and resistors. These are typical paper/wax capacitors.
I have run into the pictured 0.01 MFD metal capacitor with its case grounded. It is in the microphone portion of the schematic. I am assuming this was an early attempt to shield this part of the circuit, prevent hum and/or distortion. The cap output wire is shielded in a coaxial grounding sheath as well which I was planning to retain.
Is there any reason I could not replace this with a typical polypropylene cap, (and dispense with the case grounding obviously)? Or would it be wiser to leave the capacitor unreplaced, assuming it tested ok?

If it tests ok, leave it in. I've not seen one fail.

If one did replace it, just add a wrap of copper foil tape and ground it. I found those units to be quite difficult to service because of access to some parts, but very rewarding. Sound quality was way better than I would have thought. Lubrication and type of lube on moving parts is important.

Thanks for the reply

What type of lubrication did you use? There is only one worm gear in there, a drive for the spool. I have used a watchmakers grease for these types of applications, it has seemed to hold up well. What do you recommend?

The metal piece that carries the head slides up and down. I think I used a moly grease on the contact areas of that. I remember also having to go in with a long tube to lube one of the motor bearings. I use lightweight hydraulic oil for those.