The oil exits the bottom of the fuge yes... but you are going to want to be able to feed the fuge from the clean drum as well... so once the filtered drum is empty, the 'fuged drum can make multiple passes. If you look at the pics in my thread, you'll notice that I feed my pump from 2 drums... both controlled by valves. I run the filtered drum empty first with the clean drum valve closed. Once the filtered drum is empty, I shut that valve... and open the fuge drum valve and let it go. The pressure control ball valve I have dumping into the top of my fuge drum as its going to get hours of process time anyways... so what does bypass, will make its way through the fuge at some point no matter what.
On another note, I don't blend with d2... you want to get the viscosity of the oil closely match d2... so using d2 to thin it out doesn't work very well. I would suggest using unleaded gas or kero... gas is cheaper and does a better job IMO.
The typical blend is 80% oil to 20% thinner (gas, kero, etc..)... making W80.. then if you don't want to run W80 straight.. you can mix it 50/50 or what ever with d2 (pump diesel).
My friends 93 idi drinks w80 straight year round... he does start and shutdown on d2 however as starting when its cold out is hard to do on oil in his truck anyways.