[Skulemate]

I think you need to think more about how you're measuring the "head" in your system. A vertical column of water will work, but not set up like you have it (think along the lines of a manometer tube... it doesn't have to be a very large diameter tube at all). The way you have it drawn your cylinder is acting as a reservoir... the surface of this may ripple a little when you're running (mine certainly did) but the level is not going to change a whole lot (certainly not by the same amount as the resistances in the system)

Here's something to consider to help you find the flaw in your thinking: suppose that around 0.5m H2O resistance is caused by your waterblock for a given flow rate... that means that, by your reasoning, the cylinder level will go up 0.5m also... question is, where did that additional quarter litre (0.253L if I calculated correctly) of fluid come from?

Oh, and MadDogMe, measuring the pressure of the system with a column of water is the same as using a pressure valve... you're going to have different units, but you're measuring the same thing, and the two can be converted easily.