http://www.championtrailers.com/spin..._lub_0342.html

This looks like the one I have.

The rubber plug was solid at one time. The owner probably poked it out so he
could grease the bearings without taking off the dust cap.

I agree - but what is the purpose of the rubber plug?

I would suspect that either the seals were bad or the previous owner did not
grease often and water seeping in through the outlet hole ruined the grease.
Just a guess.

The seals appeared to be good. I suspect he did not grease often and
that water seeped in through the holes in the rubberr plug.