Hi MikeJ,
The Honda motor is a great choice, and although it costs more, I think it a wise selection and is certainly legal in most states.
The reason we elected to use the idler on the outside of the belt is based on the original design of our Silent Power manual drive system. In order to have the belt release it is necessary to suspend the belt over the front pulley, and the only logical way is to control the shape via a controlled idler on the outside of the belt. In order to keep cost down [saves consumer money]we used the same layout on the Q-Matic. Because of size & design we don't have enough space to increase the outside of the belt path without making the entire drive larger. Another important consideration is "belt wrap", if the idler causes the belt to become "oval" it can lose too much traction, slip, overheat, and destroy the surface contact area of the belt. This is most evident when using smaller pulleys [2"].
We use a special belt designed as a "clutching" belt and therefore it last longer in our system.
The Q-Matic will actually work without the idler if the right belt is used. During one phase of belt testing I used a 1" smaller belt, forced it to fit, and found it hard on bearings & made the motor harder to start [too much drag]. Our research and testing lead us to use very minor pressure on the belt return path, and therefore the bottom idler only deflects the belt a very small amount on the Q-Matic.
I will include a photo of the early Q-Matic proto-type, and the only change in the production units was to move the idler wheel slightly forward to have it contact the return belt path in the center.
Hope this answers your questions, and be sure to contact us if we can be of more help.
Have fun,