I've tried both when I built my last trailer...........
I first tried the axle approach, but the weight of the engine made the balance really bad, so then I made the hitch go to the seat post, and the balance was MUCH better. Also, with the axle approach, the engine pushing against the rear wheel caused the wheel to slide on dirt on turns, which was scary.....
The trailer pushing up high on the bike is fine, because your body weight on the seat controls the bike. It pushes you in the direction you want to go.
So far, 54.8mph topped out once, and it is stable at any speed.