If the media is being pushed out of the holes in the filter, you have the flow going backwards. Oil should enter from the side of the canister, flow through the filter media from the outer circumference toward the center, and exit out the bottom of the canister to the hole in the block just above the oil pan rail. The only way media will get displaced the way the picture shows is to push oil from the center toward the outside. Swap the hoses around so the oil from the fitting where the pressure gauge line attaches goes to the side of the canister.
If you choose to eliminate the filter, just plug the holes- - - -the oil passages to the bearings won't be affected.
Jerry
