I really enjoyed this puzzle: lots of ingenuity in the clues and a clever endgame. I think I understand the conduit reference though it is quite obscure (like some of the literary works)!
My only remaining issue, like Rickye I think, is how to confirm in the grid that I've understood everything.
I thought at first that the word made by the eight letters might appear somewhere in the grid and that was what we had to highlight, but it appears not.
So I take the instruction to mean that we simply highlight the eight letters that we transpose to the otherwise unfilled cells, even though they are dotted about?
Clarification appreciated!