Is there any reason why I shouldn't just mount the engine horizontally on this?

Yes ... the muffler will stick out from the side and its ugly and messy. That's about the only reason. Go for side mount with a pitts style muffler or 135 degrees (aka 45 degrees down) so the muffler sticks out at the bottom in line with the fuse, its really clean that way. No real engine flooding problems ... I had a Black Horse SU31 and its the same as yours, mine was mounted 135 degrees.

My ys 63was fully inverted and I had no problems. Aside from having a a muffler and holes showing through your cowl you can mount it however you like. What motor are you using? A slot is provided in the bottom of the fuse for a 2 stroke muffler provided you mount the motor at @ 7 o clock.

I did just that,the MDS muffler is so large it would not look very good hanging under the cowl so I opted to remount the engine mount
with a larger one and @ a 90 degree angle with a Bisson Pitts muffler.
Oh..bye the way,this is my Phoenix Giles 202.[X(]