You probably wouldn't have to worry too much about which is the starting position option with either the up/down or left/right, so long as you wrap the scroll like you already do with the current scheme. I like your up/down thought and reasoning, btw.
The alt scheme you proposed also has the benefit of allowing a player to play single-handed and would map to a controller well.
I will say that I didn't mind the quick select of the number keys. It actually felt pretty natural until I was going to 7 and 8. Two keyboard rows (e.g., 1234 and QWER) might be a nice option if you kept that scheme.