Was this engine modified to increase airflow? If so, you are trying to pull more air thru than the filter was designed to carry, especially when dirty.
Did the filter get wet at some point? Getting a cellulose filter wet will significantly reduce airflow capacity and cause it to fail if you try to crank lots of air thru.
Though the filter doesn't really look excessively dirty (you said you blew it out) it may have been restricted enough to distort via the extra restriction.
If I were you, I'd install a restriction indicator on the air filter housing. Good maintenance indicator no matter what, but if you are indeed running more air thru via mods, it will tell you how restricted your air filtration system is and if nothing else, tell you when it's time to replace it (which in this case would be earlier than a stock car).