Sorry it takes me 2 posts sometimes.
No, the filter element doesn't drop into the housing. The end of the filter with the "blanked off" hole snaps into the filter housing cap, then finesse it into the housing and screw it down. Be sure to replace the large rubber O-ring. I use the ratchet to tighten it. Don't worry, just tighten it. If you already have a torque wrench, go ahead and use it the first few times. I guess what I'm saying is I don't feel it neccesary to use the torque wrench(for the oil filter housing cap), but I've got the "feel" for it now. As a comparison, I always use a torque wrench on wheel bolts, I don't use the impact gun to final-tighten wheel bolts, so I feel I'm fairly picky.
One final note Jack. The engine holds about 7 1/2 quarts of oil, that's alot of oil to hold the dirt and whatever accumulates in the engine, plus it's a good filter. I recommend 5000 miles on the oil change instead of 3000. Just my opinion, again I'm pretty picky myself.