I installed a water heater bipass, and winterizing valve near the pump, on our '93/4 Flair last winter. The bipass looked like ScottyByes diagram except it only had two valves, one at each juncture of the line and bipass line. They were 1/4 turn two way valves and directed fluid either through the line while blocking the bipass or, through the bipass while blocking the line. Don't forget to drain the tank. You may decide to replace the plug there with a valve.
You are very correct, there is very little working space. I removed a panel held in place by a few (4?) screws and a heater duct that ran through that area, collapsing it back beyond the water heater. That gained a little more room. I was concerned about leaks and was happy with the water heater bipass, but not so much with the winterizing valve. With it I had to add a bit of line and move the water pump to make room in the line for the valve. There is a very small leak in it that I still have to correct.
Best of luck.