1 psi = 2.3' of head.
Imagine you had a canister filter, with 20' of vertical plumbing. most canister filters would not be able to pump very much water at all, even though its a closed system. GPH is directly effected by distance pumped.
That is true to an extent, but the distance isn't the key so much as the water velocity through the pipes. Pipe friction increases exponentially as water velocity through the pipes goes up. The water velocity is determined only by the plumbing size and the flow rate, not the length of pipe. You can pump 1000gph of water through 2000' (yes that's two thousand feet) horizontally (or up and down through a closed canister system) with a 3" diameter pipe with less pump flow losses (your pump would see 2' of system head) than the losses you would have pumping that same 1000gph of water for only 10' through a 3/4" diameter pipe(your pump would see about 8' of system head).
I think the issue that is being run into is that there are actually four main types of head in plumbing systems, and most people only talk about and calculate for one of them. There is "static head" which is the resistance of gravity. It is caused by there being a difference in height between the input and output of your system. Vaughn is right, in your case that is zero since you have a closed system. There is "pressure head" which is the resistance to flow through things like filter elements, bio-media, etc. It is the energy it takes just to get the water through a pleated filter (for instance) at a certain flow level. There is "velocity head" which is calculated based on how fast the water leaves the system outputs when returning to your aquarium. The last one is "resistance/friction head". That is the resistance to flow caused by the internal resistance of the plumbing itself due to the number of bends you have, pipe size, etc. These three are a little trickier to calculate, because they are flow specific. An increase in flow through the same system will increase all of these losses, and a decrease in your system flow will decrease all of these losses. The extent of the change will be dependent on how much your flow rate is changing and how efficiently your plumbing system is designed in order to handle the change.
The combination of pressure head, velocity head, and friction head (and another factor I will explain later) within your system is what is giving you the 3.5psi reading. Your 3.5psi reading can be an accurate assessment of your system pressure, but there is a qualification and an adjustment that needs to be made first.
Your gauge will only tell you a valuable number if the water that is feeding the canister is coming directly from the output of the pump without going through any other items first. If your system is truly in parallel that should be the case.
Your gauge is not only measuring your system head when the pump is running, it is also measuring the static pressure of the water depth since you have a closed system. If your gauge is about 4' below the water, your gauge should be reading about 1.75psi when the pump is turned off just from the pressure of the water in the tank pressing down on the water in the pipes since there is a complete siphon. That is not "static head" though, because when the pump is turned off that tank water will be pressing down into the canister filter equally down the return line and intake line, so the net “static head” will be zero. The pump only cares about differences in pressure between the intake and output, not the water pressure within the pump itself.
Think of this. When you dive into a lake and then swim 1' under water it is easy to move your arms and legs around and you feel little pressure pushing in on your body from all sides. If you then sink down to 10' of depth you can still move your arms and legs just as easily as you could at shallower depths, but while you are doing that you will feel more water pressure pushing in against your face and the skin of your body from all directions. That pressure pushing in against you from all directions cancels itself out when it comes to movement. That is why a submarine can travel at 5 mph at 10' of depth or 100' of depth using the same amount of engine power. All the added depth wants to do is crush or implode the submarine from all directions, not slow down its' forward motion.
You have the same issue. Your pump being 4' or so below the tank when everything is set up is causing the water to push heavily outward on the pump from all directions when the system is at rest. That pressure is water that is trying to push past the pump seals and leak water out onto the floor of the house. That is why canister filters have a maximum recommended distance that they should be mounted below the tank, to keep the pressures that are trying to leak water out of the system through the seals to a minimum. Vaughn is right, assuming that you have no plumbing losses, you could have your pump 30 feet below your tank and it would still see the same system head when the system is running, but if you did that you would see about 13psi of internal pressure within the pump even when the pump is turned off. Most pump seals for canister filters couldn’t maintain a watertight seal against that much pressure and they would leak.
In the real world however, you do have more friction, pressure, and velocity head the farther your pump is below the tank, so the pump will not be able to flow as much water when those things increase. If the pump's flow decreases enough it might not be strong enough to prime itself or pull air bubbles down through the intake line and keep a complete siphon going in the system. As a bubble sinks in water, the increased water pressure compresses that bubble and the bubble becomes smaller. Water does the same thing, but the compression is almost non-existent since water is so dense to begin with. The smaller a bubble is the faster the water around it has to be traveling in the downward direction in order to keep pulling that stray bubble down inside the canister intake pipe (in order to keep the system primed). Most pumps aren't strong enough to pull bubbles down for more than a few feet at most, so that's another reason why you can’t have the canister too far below the tank.
Now for info specific to your setup. I would adjust the mazzei to exactly the flow level you desire, and also add all of the media to the system that you will eventually be using before taking your pressure reading at the canister. Any change in a single leg of a parallel system will change the flow rates and pressure drop across all of the other legs of the system. Just your canister filter getting dirty will increase your flow rate through your mazzei for example as your system finds a new balance based on the higher resistance through the canister filter. After everything is added and the system is adjusted for optimal flows through all of the elements, turn your pump off and then read the gauge. It should read about 1.75psi or so. That can be subtracted from the reading you have when everything is up and running. Now turn the system on and take another gauge reading. Subtract the reading from when the system was off and that will be your system’s total head resistance. It might sound surprising to you that your system head is so small, but that's because you have everything in parallel. If it was all plumbed in series you would be looking at something in the neighborhood of 15' of system head (even without there being any static head), but most likely you will be somewhere around 4' or so with your setup. You might be wondering why anyone would ever run everything in series with that being true. When the system is in series every drop of water runs through every system element, so there is 100% filtration for every drop of water. With parallel plumbing like you have only around 1/3 of the water that goes through the pump actually goes through the canister filter assuming that you have 3 parallel legs that are each flowing about the same amount of water. That is fine though for the levels of flow you want to be running. You are essentially using your plumbing system for simple tank circulation just as much as you are using it for filtration.
I would size the new pump to flow 1000gph at your corrected head measurement from the gauge after everything is tweaked, the static reading is subtracted, and the media is added. That will underestimate your actual flow a bit when you are all set up in order to ensure that you will still have at least 1000gph of flow even when your filter cartridges are dirty.
The main problem that I can see happening is this. When you have parallel legs like you have, there is a certain level of flow that you need through each element (like your mazzei) in order for it to even work effectively. You might find that going down to a 1000gph pump is too little system flow to get adequate water flow through all of your parallel system elements. If that happens you will then have to change some stuff to series plumbing in order to increase the flows through the individual elements, but that will increase system head and drop your pump’s flow rate, so it is a possible catch-22. It is hard to know if everything will work fine as you have it with only 1000gph of flow, because the Reeflo Dart pump you are using now is flowing more than 2x that 1000gph level right now. In order to find out if this will be an issue, try this. If you can turn your mazzei flow rate down 50% from what it is right now and still get good misting I think you will be okay, but if not I don’t think buying a new pump that can flow 1000gph will work without rearranging things a little bit. Rearranging things will change the system head so your new pump will then be mismatched for the flow level you are looking for.
Have a good one, Jeremy