I'd like to know how the phrase "point Percy at the porcelain" is relevant to 'urinate'. Any background story behind it?
Percy is slang for penis; a urinal is made of porcelain.
...which pretty much explains it.
It was popularized (some may say contrived) in the '70s, as the Phrase Finder explains:
This is one of the numerous slang phrases related to sex or drinking coined by the Australian comedian Barry Humphries during the 1970s and onwards. Humphries' Barry McKenzie column in Private Eye contained a fictional account of the doings of 'Bazza' McKenzie - the role model for the later creation Crocodile Dundee. In 1972, the character was used as the lead in the film The Adventures of Barry McKenzie, which contained a list of similar phrases:
Barry McKenzie (Barry Crocker):
Now listen mate, I need to splash the boots. You know, strain the potatoes. Water the horses. You know, go where the big knobs hang out. Shake hands with the wife's best friend? Drain the dragon? Siphon the python? Ring the rattlesnake? You know, unbutton the mutton? Like, point Percy at the porcelain?
I'm not sure how valid the use of 'coined' is, as it may have already been in use in the UK, per the New Partridge Dictionary of Slang and Unconventional English. Suffice it to say that it grew popular in the '70s after Humphries' use of it.
That said, Idiom Origins says that many Australians "disassociate themselves" from it, as they consider it an example of psuedo-slang.