You can install a larger fuel filter in its place, or another cartridge type filter, what that part was there for was as a fuel reservoir for the high pressure pump
The return line can just be spliced, it doesn't need to go thru the new filter
High pressure pumps have no suction, low pressure pumps do, its the difference in the way they work
i.e. the old mechanical pumps on the engine could suck fuel from inside a gas tank 10feet away, and up and over the top of the tank
If you removed the low pressure pump in the tank and just had high pressure pump in the frame rail it might work as long as the "siphon" effect kept fuel in the hose at the high pressure pump
But as soon as "siphon" was lost, no start, siphon would be lost if you went around a corner with under 1/8 tank, lol
Which is why the low pressure pump and that canister filter is there
Yes, if the original canister filter was getting clogged up, or bad valve, that would have caused cavitation in the low pressure pump, causing the air
If the canister was leaking you would have smelled that, or seen it