I don't recall flatheads being discussed in the thread . . . I must have missed that.

My questions/comments stem from a general curiosity on your build and how you intend to overcome potential issues that result from modifications.

IMHO there are 4 reasons for a by-pass loop including:
-promotion of even and rapid warmup
-preventing water pump cavitation
-avoiding hotspots from developing in certain areas (as panic points out)
-or worse creating steam pockets near those hotspots

On my heavily modified stovebolt the by-pass loop runs through the intake manifold water jacket - serving two purposes at once.

Keep us posted on the progress. At the rate your going it should be running soon.