The correct transmission cooler hose is available online and the OE version has a spring coiled on the outside of the hose to prevent it from being cut. If the trans is operating properly, there should be no need to block anything off or modify the cooling system.

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1991 F250 super-cab 7.3 IDI. (rebuilt by me) Banks Sidewinder turbo, hydroboost brakes, new IP and injectors.
2003 S430 - 107K
1983 300SD - Tanoshii - mostly restored ~400K+.
1983 300SD - Good interior. Engine finally tamed ~250K.
Monark Nozzle Install Video - http://tinyurl.com/ptd2tge