Mike, I just folded the compression straps over, making the loops--I didn't cut anything. I sewed them together with kevlar thread, for overkill strength, but heavy duty nylon thread would work as well.
I chose to place the tubular webbing on the inside of the hip belt, mainly for esthetics (to hide them). It's easier to find the existing pack seam when placing it on the inside. All of my mod stitches were placed into existing pack seams for strength. The mesh pocket on the outside sort of interferes with finding the seam on that side of the hip belt. As for the fit, I don't feel the stay much at all-- perhaps only if I was "doing the Twist" without the hip belt cinched up, then I can barely feel the very bottom of the stay. If you place yours on the outside it would give you a smidge more room at the hips, but not much more. And if you place the sleeves on the outside, and then beef up the hip pads like I did, you won't feel the rods at all, no matter how crazy you dance.
Let me know if I can be of further help, Mike.
PS--I'll be hitting a few trails in YNP in August (Rescue Cr., H*llroaring Cr, and Lamar R. in the north, and Fan Cr. and Specimen Cr. on the west side)). Any goofy griz incidents so far this year? I talked with Jim Williams, the head BC ranger in Mammoth, and he indicated that the melt-out was early and that things are rapidly getting dry. With the weather this year so radically different from 2011, I'm curious as to whether the bears will get all psycho again. I hate when that happens...