The first intrusion of mutants into this storyline is in issue #172, when Banshee, queuing for Merle Haggard tickets, literally bumps into Captain America. Cap's reputation has been trashed by machinations of his enemies at this point, and Banshee - who were are told is in hiding - takes off his street clothes and starts a fight with Cap and Falcon! After some inconclusive fighting Cyclops arrives, looking for Banshee. Professor X, Cyclops and Marvel Girl explain the situation to Cap. Various mutants - including all the other X-Men - have been captured by a group, the same one that has set up Cap.
In a continuity-heavy page, we're told that Angel has been missing since the events of Avengers #110-#111, and they could not locate the Beast, either. Havoc and Lorna Dane are also missing, having never returned to the X-Men after their appearance in Incredible Hulk #150. Further, Iceman went missing on a scouting mission. This has left Professor X with only Cyclops and Marvel Girl, and led them to try to recruit Banshee. They'll take Captain America and the Falcon as allies instead, though. Linda Donaldson finally did capture the Beast for the Secret Empire, although she was confused when Hank McCoy, who she was spying on, vanished too. Steve and Sam save her from a staged attack from Cyclops, which gives them an "in" with the Secret Empire.
There's an odd scene in #174 which appears to be there to explain why the X-Men are suddenly wearing their "classic" costumes again, rather than the redesigned individual ones from later in the run. The mutants (the missing X-Men as well as Mastermind's fake brotherhood line-up, and Mesmero) are finally rescued by a team-up of Cap, Cyclops, Marvel Girl, Gabe Jones, and Peggy Carter (!). Cap then goes to confront Moonstone, and unmasks Number One - who is revealed to be some prominent government official (presumably *Nixon, although we never see his name or face), just as he commits suicide. This is Marvel's version of Watergate, although from text we can see that the some real Watergate scandal has happened as well. An editorial note note in the letters column for #173 apologises for the plot, planned long in advance, now seeming like small fry, saying that it has been curtailed early for different things.
We're promised, in a letter in #175, that X-Men will be making its return as a series soon - that they'd nearly put an announcement in #174 but had pulled it at the last moment...