Yeah, the coolant plug on the side of the block is 1/4" (-4 AN). Though there are 1/4" NPT fittings with 3/8th barbs. The radiator is the ultimate return location for coolant. Pretty much anywhere you get coolant from the engine will return to the radiator.
The line under the thermostat should be the "return" line for the heater core. The lower hose off the engine to the heater core is the out flow. If you are returning to the radiator though, the line under the thermostat should flow coolant.
Why not run the oil feed under the engine? Or between the thermostat housing and valve cover?
