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Install the 2 1/2 hose with nozzle under the table and in front of the blade where the blade exits the table. I used a speaker magnet to hold it in place. I find that this arrangement will pick up 90% if the dust before it goes into the lower cabinet.
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As long as your shop vac has some guts it should do fine. Given it is 16 gallon I would guess it has plenty of power. I have a shop vac hooked up to my 14" saw for the same reason. With my 20" bandsaw the shop vac just wouldn't do it but for the 14" saw I didn't have any trouble. One thing to keep in mind is the BS makes some pretty fine dust which will clog the filter pretty fast. You will want to use a bag or use one of the various 5 gallon bucket separators.
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In case anyone else might consider doing this to their 10-325 this modification will work, at least it does with my 16 gallon RIDGID shop vac. I made the step down modification at the 4" discharge outlet on the bandsaw with a Fernco 1056-42 flexible coupling. The 4" side of the coupling was initially pretty sloppy but did tighten down nicely. The 2" side was like it was made to fit the spigot end of my 2½" shop vac hose. I made a bunch of test cut and the dust collection was excellent.