[Jac Mac]

Mando, do you or Steve have another pic of your system from either side, I was going to draw a sketch of your reqd hose layout, but would like a better pic before doing so.

The two -12 lines you currently have from the rear of the intake are not reqd in my view.

Water for the heater should be sourced from the housing with rad cap.

No coolant should be removed from the rear of the intake or heads ( other than a couple of very small bleed lines in some cases to help bleed any entrapped air only-no major flow - these should plumb into the same point the front -12 lines do by the radiator cap)

Return from Heater must return to suction side of pump IE the lower barb on pump that you currently have blocked off.

Thermostat- do you need one, in order for the heater to function & have quick warmup periods,Yes. If this is a dedicated track/race car you can fit a restrictor in the top radiator hose, in which case the bypass can be deleted, but only if its an out & out race car. Plus that looks like an electronic injection setup & I would imagine that engine temp will have an input into the computer that runs it.