I've done them both ways, but it seems to make more sense to return the warm circulating water straight into the bottom of the tank, rather than to lift it to the top of the tank, and then push it back down through the cold dip tube. (minor detail )

I always use a 3/4" T as well, because as Joshua said, it's easier to drain the tank with a hose than with buckets when it's time for replacement!