Yep. Very good tip. That back thrust washer can take a beating if lube supply becomes marginal. That's another story. Mike explained the retrofit very well. Keep the rear unit end play to a book minimum. I also see that the lube orifice in the mainshaft is still in there. Knock it out.
No flame suit needed here. Every builder has different ideas on how to do things. Some very explainable, some not. This is one of the procedures that is not explainable because the engineers that decided on how to seat the snap ring never published why they wanted it that way. I totally agree with your explanation of why the snap ring should be open in the wide open area. When you install the snap ring the OEM way, you do lose engagement with one case lug. I fight with this one as well. But, there must have been a very good reason for the factory manual to specifically outline this procedure, as kooky as it seems. If I had to guess, I would say that you want the gap portion of the snap ring surrounded by case lugs, because it's less likely the snap ring will collapse inward when pressure is applied to it. Try putting the snap ring in the case the way OEM suggests. Then try to take it back out. PAIN in the ARSE, isn't it. Now put the snap ring in the case with the open end at the band anchor side. Now see how easily you can pry the end of the snap ring inward to remove it. The reason why a thicker snap ring is suggested in this spot in the first place is to keep the snap ring seated in its groove when its loaded with high line pressure. When the stock snap ring pinches inward when the int. pack is applied, it puts more load at just the tips of the case lugs. That is what fatigues them and eventually causes them to snap off. Sure the high line pressures also fatigue them. But, loading them at the tip only fatigues them faster. Also. notice how the first few case lugs to start breaking are always closest to the large open gap? Try removing the snap ring by prying near one of the lugs bordering the open area gap in the case with the snap ring installed the OEM manner. Then try prying the snap ring inward at the same spot with the open end of the snap ring installed incorrectly. See how much easier the snap ring moves inward. When the snap ring is loaded under normal operation, you can see the snap ring will collapse inward near the open gap area in the case much easier when installed incorrectly. That means shorter life for those bordering snap ring case lugs. I hope I explained this well enough.
Good tip for a lower HP build. If your doing 1,000HP+ you better do all you can to help the int. and direct live. Sure that shocks things more, but at that level, racing is sacrificing the weak. Running a wavy in that pack at high HP levels will always seem to overheat the wavy steel at the points that first contact the friction. That's localizng heat buildup too much for my taste. It most assuredly ends up in an overheated friction element.
If the int. shift is too firm, I prefer to start installing more int. piston return springs. A4LD direct return springs work good there.
