With a 3rd function kit you have a supply and a return line but the return does not go directly to the tractor motor oil sump; it goes back through the 3rd function valve. If you are running fluid out one line, then fluid comes back in the other so that seems like it would run the Lane Shark fine. But if you stop, both sides of the valve close. That's a good thing for a grapple because it means the jaws stay where they were when you stopped the flow. It's the same for the loader and the loader valve - otherwise the bucket would go to float whenever you stopped raising the bucket.
But it's not a good thing with a hydraulic motor spinning a HEAVY blade because when the flow is stopped the blade will continue to try to turn - the motor becomes a pump pushing fluid to a closed valve. Pressure will build up on the motor return side and the seals will blow out. The C-Flow kit gets around this. It provides a direct connection back to the tractor motor sump through a separate line with no valve to stop it; that allows the blade and the motor to slow down without over-pressuring the motor. There is also a bridge between the pressure and return lines that allows fluid pumped by free-spinning blade to circle around back to the motor so there is neither pressure or vacuum on either side of the motor.
I don't know why the kit is so expensive. The replacement joy stick handle with simple start/stop controller circuit is neat and everything is measured out for a particular tractor model making installation way easier than buying all the connections separately. If you follow directions carefully, all will work whether you understand why or not.
One weird thing is that although WR Long builds the C-Flow kit for Lane Shark cutters, they will not sell it directly to consumers or dealers. Purchase must go through Lane Shark. The only reason I can see is the two companies don't want other implement makers to take advantage of what these two have worked out.