hotroddaddy, there will be no problem using a keg in the trunk. Just make sure to vent the keg to the outside of the car (fumes in the trunk area are a disaster waiting to happen, especially if you mount your battery back there too).

The reason you would want the return line in at the top instead of halfway down the keg is that 1/2 way down, there is a "head" of pressure from the fuel in the keg that is opposing the entry of the fuel in the return line. There should be no resistance to the flow of the return line.

Anyone mounting a keg should be very cautious about the supply line coming off the bottom of the keg. Make certain that there is no way the line can be torn from the keg by flying debris or by suspension parts moving to their extremes.

Some cells are sold with foam that is stuffed into the cell to prevent fuel from sloshing back and forth in the turns. I think I would investigate a source of this foam to stuff in my keg.