Cool! I have a Friday on order now and was kicking around similar ideas, inspired by the Moulton luggage system. Deepak, you certainly could do it with panniers- probably 99% of the loaded Fridays I see on the internet use regular off the shelf panniers. But it sure would be nice to take full advantage of those little wheels. It would also be nice to have the backpack for off bike stuff, and why carry both backpack AND panniers?

I was going to point out that your experiment was with a rack a mile above the rear tire, and didn`t take that advantage until LeeG gave an even better explanation than what I had in mind, and even included a great idea to solve the issue. Another comment about the way you tried it in the pic above is that, with the backpack "face up", all the straps are free to get into mischief with your spokes (the flagging straps that Valygirl warned about). Simply flipping it over would help some, but it`s still mounted much higher than it needs to be. I like how the guy in the Path Less Pedaled video sat the backpack upright and made use of teh saddle to keep it from tipping. Glad I bumped into this thread- I was going to post a similar one in the folder section.

Here`s a picture I found on the internet featuring a (heavilly) loaded TSR in case you hadn`t seen how AM does it. Have fun!