I'd recommend 1/4" as I think it will look better, 3/16" is probably fine though.

I'd use inverted flare fittings same as brake lines. I'm not a big fan of compression fittings.

Either use normal brake lines, flares and all if you don't want to flare line yourself. Or I really like Copper Nickel line, it's exceptionally easy to work with and corrosion resistant, better than stainless in both areas. Try part number CNC-425 at Auto Zone or Advance, others too I'm sure.

For fittings look at this Weatherhead catalog, get them off the shelf or order them at NAPA or a hose shop.
http://eatonsite.com/HydPLL/pdfs/E-BRFI-MC001-E4.pdf
Pages 36-40

I think all the NPT fittings/holes you're dealing with in the block and filter canister are 1/8".

Here's an example of what you can do with what I've just mentioned; an oil line, and I've done numerous air and fuel lines the same way as well.
http://rides.webshots.com/photo/2888151120080251109tpIKCi

Grigg

•1951 GMC 250 in the Project Journals
•1948 Chevrolet 6400 - Detroit Diesel 4-53T - Roadranger 10 speed overdrive - 4 wheel disc brakes
•1952 Chevrolet 3800 pickup
---All pictures---
"First, get a clear notion of what you desire to accomplish, and then in all probability you will succeed in doing it..." -Henry Maudslay-