I know that Tracy doesn't have any concrete proof that oil shouldn't be returned below the oil level, and logically it shouldn't make a great bit of difference, but I do agree with him here and think it's worth the effort to install a return port above the oil.

With the return below the oil level in the pan, obviously the pan oil will back up into the drain line.  I think Tracy made the key point.  If the oil is from the re-drive is “frothy” (which it likely is) it will “float” at the interface with the clear oil and back up the drain line; in other words, not drain.  It will only drain at a rate at which the oil and the entrained air separate; which in a tube could be very slow.  A small amount of pressure would push it through, so it is not going to “blow” a seal, but oil backed up into the drive is likely to result in some seal leakage, as well as possible overheating of the oil.

So it seems clear – return to a place above the pan oil level, and as best you can, maintain a positive slope in the line from the drive drain port to the drain outlet.   

Al