OK, enough putting this off. Here are photos of the KN filter.
First thing is to use an old filter, and cut out the paper element. Then take the KN and fit it into the old plastic filter frame. Simple as that. It's a little long so it may bow in the middle. I might end up glueing the filter into the frame. There are also two little plastic tabs that stick out on the inside of the frame that need to be trimmed down.
I still need to correct my idle, lube my cables, etc. so I won't have a performance review for a while. However, this KN filter is used on a 1000cc engine in a Moto Guzzi, so I don't see how there would be a problem running it on a 250cc engine.