Black Olive, I'm in the process of a very similar setup using universal Pipes Hose's etc to get the filter in the same possition as per your pic above.
(See my BHP MODS) post. I had a tiny filter on the end of the Version 1 fitment and it deffo restricts the power. I'm hoping that the Larger filter I have got will sit in the original place like yours when version 2 is finished. I also took out the blanking plate (Late Mk1) under the indicator and put some Ducting in to the filter too. But version 1 the filter was just drivers side of the rad i.e. engine bay side of the gap passing through to the original place. So all being well with the new larger filter and the ducting sat in the original place I'll see an even better improvment!
Fingers x'd anyway!