A couple of ideas to throw at you Fixittt, if you use a right angled hose connector directly above the impeller axis, and seal the drive shaft as it runs through the side of the connector, that should work (sealing will be a bitch though) which leads to my second thought...
This idea also let's the intake of the block be directly over the impeller axis,
and eliminates the sealing problem, allthough it does involve using a top mounted res, but it doesn't need to very large .
Have the impeller in the block driven by a long spring, it can run up the hose to the bottom of the res positioned at the top of the system, the spring then can be driven by a 12v motor sitting on top of the res, safely out of the water with next to no chances of leakes
Idealy the block intake to res hose shouldn't be too long and should have a nice even curve to minimise wear.