welcome Demon,
i like the idea of the KPM setup and with some changes it will work as its supposed to. however you will find that the Venturi in the bottom of the pot is the restriction ad essentially Regulating your pressure.. I was one of the first to use this setup and i addressed these issues, but in their opinion their was nothing wrong with it... as Toads mentioned, disconnect the return into a bucket and monitor the pressure, if it drops then something after the reg is the restriction, if not, then its the reg
however, in my experience, the venturi will be smaller, so no matter what, reg, rail or lines you get, it will be "regulating" the fuel flow
you will be surprised how many "Professionals" don't think there is an issue running the system in this way, i.e the herrod and KPM drop in 460 setups, has anyone actually checked base pressure with these installed? i think you'll be surprised
drilling the venturi will effect how the swirl pot fills up and you may introduce fuel surge, so if your going to drill it, do it in small steps
i run the twin 460 intank setup with -8 SS feed and return, PW rail, and a big Magnaflow reg.. its happily supporting 550rwkw in all conditions