Jerry, I made this bed for a friend of mine. I thought it would be a piece of cake. My pride said, "Hey, it's a Woodsmith plan, how hard can it be?" How true it is that pride comes before the fall. Foturanlty my "fall" didn't include any major mistakes, just a good dose of humility when I began to see how much time it would take to get the curve just right and then get everything to perfectly match the curve. It took some time, but it was rewarding in the end.
The biggest problem that I had was making sure that the vertical pieces met perfectly with the curve of the cross pieces. Other than this, everything went pretty good. This style of furniture dosen't turn my crank, but I really, really like the way it came out.
As far as the panels, I'm sure you can do it the way you suggest and it will look just fine. I don't recall why they did it this way. It's been close to a year since I built it. But if I can be of any help, just drop me a note. Have fun!
Jason
Edit: P.S. Here's a couple links to some other furniture that I built to match the set adapted from some other Woodsmith plans so that you can see what would match the bed. <A HREF="http://www.sawmillcreek.org/showthread.php?t=5192" TARGET="_blank">Chest of Drawers</A></EM></font>, <A HREF="http://www.sawmillcreek.org/showthread.php?t=5967" TARGET="_blank">End Table</A></EM></font>