Graeme,
Haven't spotted this discussion before. Main advantage of crank-mounted clutch is as you found out - cos the torque load is much less w'out primary reduction, they can be made much smaller/lighter to handle the same power. But balancing them is apparently very critical cos they spin so much faster.
I once read that Jeff Smith said, when BSA was chasing light weight at all costs, they were going to develop a crank-mounted clutch to save more weight.
Inertia effect is changed of course, but is secondary consideration. Not so much inertia effect w regular mounted clutch, cos of reduction. Also as has been said above, it spinning in reverse in the regular positon cancells out some of gyoscopic effect of crank.
I've never been able to figure out why they were said to have gear-shift probs caused by the crank-mounted clutch either. I suspect Jared may well be correct when he says elsewhere that he suspects most of those probs were cause by the poor crancase castings not holding the bearings/shafts in postion, rather than by the crank-mounted clutch.
One problem was said to be that the crank-mounted clutch on the Monty was a fair way outboard of the bearing causing a kind of whipping of the crankshaft end. That certainly makes sense. One would have tho't that may have lead perhaps to cranks snapping (ie the ends off), bad wear on the primary drive gears, & bearing failure or hi wear.
Tests of the day said the VA360 made plenty of power w a beautiful broad spread of power. I seem to recall Trevor Flood raced one briefly. Lyall O
Brien once told me the factory guys like Hakan Anderson immeditaely replaced the crank-mounted clutch w a regular one on their race bikes, but never told the powers-that-be at the factory.