Remember the 700 has a vane pump like a tail gate motor. Without billet pump rings, high pressure will blow an expensive pump and put you on a flat bed with a high dollar repair.
You will only be using 4X4 in soft terrain with your part time TC so you will have tire slip and it won't matter. If you try and drive on hard surface no matter how perfect your tires match; you will break something. You are over thinking this.
Do you see the small pink spots on your filter? Those are the unplugged parts of the filter left. Those pink spots are where the pump is trying to suck fluid through. Aint happening. If you can't figure this out, I can not help you anymore.
Red or tan paper material. You will have to peel the filter open and unfold filter paper to see it. Make sure you have another filter handy when you do this or you are dead in the water as far as driving.