1200GPH coming out of a single 3/4" return is way too much in my opinion. The water velocity coming out of that nozzle would be huge! I would do at least 2x 3/4" returns and maybe put a couple of y's on the ends to disperse the flow even more.
I would go for the larger drain though. You never know when you'll get the itch for more flow
As for the closed loop, you don't have to drill your tank for a closed loop. You can always do an over the back closed loop or forget the closed loop completely and use powerheads.