Funny, after toying around with this a bit more last night I had all but convinced myself to stick with the original Chief on the front left position, but was waiting to hear from you guys first...and you all seem to agree with my second plan. Decisions decisions! Your points are all good ones...
Tsunami, the reason I was going with a chief on a baby Steg is because S5 is more than adequate to kill elves, and the game I have coming up against the HE is 2200 points and those extra 40 points do not easily fit into the character allowance. Frankly there is a good chance I am just going to take the baby steg without the chief...
All of this brings up a further point: that there is really a lot to be said for allowing for future customization. Not to mention being able to remove crew to mark off wounds. So now what I think I should do is make the crew figures all removable and configurable by putting wire pins in their feet. It means drilling holes in the floor of the howdah, but that won't necessarily look all that bad, since the floor is wood, and wooden beams with holes in them is a fairly common sight.