Well, just two days ago I did a rigging job for a man who had built a beautiful Paul Gartside-designed lapstrake (clinker) dinghy. In the process I tried out the method as depicted in the above drawing, and although it worked, the parrel had a tendency to hang-up on the mast due to friction between itself, the mast, and the halyard. I quickly re-rigged it so that it ran under the rolling hitch, and everything was fine.
So lightly attach the snotter to the yard or the halyard where it is secured to the yard. That way, the parrel/snotter will lower positively with the yard.