What is the displacement of the pump that you put on? Also most little gas engines run about 3600 rpm. Trying to guess your flow rates vs the hose sizes.
From your statement above, of 700 and 400 psi, pressure is only generated to a point that is needed to move the flow through the system. The side that is using 700 psi unloaded has a restriction that needs 700 psi to move your volume of fluid through the restriction. Same thin on the 400 psi side. When they come back to together to go through the filter, the pressure will drop. After the filter it goes into a tank with 0 back pressure. If you measure the pressure after your last valve but before the filter, you will be reading what it takes to push the fluid through the filter to the tank.
Think about this for the heat. It takes a certain amount of energy to get the fluid up to 400 or 700 psi. That energy is from the engine from the pump to the fluid. When that pressure is dropped the fluid still has that energy, since it is no longer being stored as pressure and velocity, it turns into heat. Basically all the energy of the pump is going into heating the fluid. When we solve the pressure issue your problem will go away.
Again we need pics of your rig to help troubleshoot. Send me a PM on here if you need help posting pics and I will send you my phone number to help you post them.
