Well I don't know about wrong or right placement of a plastic filter element but I do agree that mounting the filter down low prevents covering everything in gas if it fails.I haven't heard that saying, so I guess I've been successfully doing it wrong for 30 years. Heard way too many stories of engine fires from filters up by the carb.
It's my understanding that paper filters are slightly more of a restriction than SS due to their density, and this can cause extra strain on a pump. Block mounted pumps rely on atmospheric pressure to get fuel from the tank with minor suction occurring, and fewer restrictions is always better. If the paper filter should disintegrate then the pump can become clogged, the other option of course being the inlet screen on the carb. It's also worth noting that paper filters in a plastic housing shouldn't be mounted pre-pump, as the thin walled ones can flex in and out and lessen the flow. But for most people it's probably not an issue.