One thing that you can do (which the factory also did) is to put in either an oil pressure gauge or warning light in a tee right where the return line from the filter goes back into the block. This will let you monitor what the pressure is on the downstream side of the oil filter and tell you if it has failed or not.
What year 261 block do you have? Is it from the US or from Canada?
I use the factory cartridge filter on mine. It has a bypass built into it along with a huge paper cartridge filter that lasts a long time. It is a little messy to change but I like that I can check out what it has picked up without having to cut up a spin-on filter.
