I don't personally use breaths, because I'm extremely lazy. I'm the person who renders the chorus one time, then copies and pastes it over and over again until it sounds like Circus-P. But I do believe that there is a best method for using breaths.
And this isn't it.
Breaths are a non-tonal sound. They don't need to be pitched up and down, or stretched an shrunk. When you use them inside of UTAU, you're subjecting them to your resampler, and it adds whatever artifacts the resampler makes.
Instead, wait until after you've rendered out your UST, when you're in the process of mixing. Import the breath files onto another track, time them in the right spots, and adjust the volume to a natural-sounding spot.
This is what it sounds like to use breaths in the UST.
This is what it sounds like to use breaths in mixing.