You can install the reg back near the fuel tank if you don't want to run a full return system. It is handy having the reg and guage in the engine bay as you can easily check and adjust your fuel pressure.
A non return system is pretty much how the stock LS1 fuel system works. The regulator is actually inside the swirl pot. A single line runs from the tank to the fuel rails. You could duplicate this setup fairly easily with an external regulator. The disadvantage with a single line non return system is that the fuel sits in the line and the rails and soaks up the engine heat. A full return system always has fresh cool fuel circulating from the tank. It will pick up a bit of heat from the pump but not as much as from the motor.
I'm running the Sard regulator like Phil N and others and they seem like a good unit. They are very popular with the Japanese turbo Supra and Skyline crowd.
I've the regulator mounted on the firewall with a liquid filled pressure guage attached. You can see from this pic where the main line from the pump runs into the back of the passengers side rail. The fuel runs down one rail across and back up to the other where it's connected via a line to the regulator. The regulator bleeds off excess pressure to the return line back to the fuel tank and maintains the set fuel pressure in the rails.
Hope this helps
Cheers