MMM, your home-grown approach would make even a rocket-city redneck proud. But if I understand your design correctly, I'm not sure that it will be structurally safe just because you ask your local machine shop for heavy-gauge 2" tubing. If the rack ends up weighing 250 lbs w/o bikes, and you add 8 bikes @ 25 lbs each, you're at 450 lbs. At that point, the bending moment on the hitch will vastly exceed the design limits of "500 lbs", since that was based on trailer tongue weight. The hitch and mounting isn't rated for bending loads beyond what a normal trailer would present.
Under that kind of bending load, which the hitch designers never considered, the hitch itself may hold up, but the mounting points on the vehicle may yield. My guess is that you'll get adequate warning in event the mount yields to the bending loads while on a trip, but I'm not sure about that either. Suggest you might want to consult an engineer who's knowledgeable of vehicle design before proceeding. If not, just build it your way, but at least do a good overload test before taking it out on the road loaded with bikes, and then keep checking the hitch and mounting.
Overall, a light-weight trailer is a much better solution IMO.
Under that kind of bending load, which the hitch designers never considered, the hitch itself may hold up, but the mounting points on the vehicle may yield. My guess is that you'll get adequate warning in event the mount yields to the bending loads while on a trip, but I'm not sure about that either. Suggest you might want to consult an engineer who's knowledgeable of vehicle design before proceeding. If not, just build it your way, but at least do a good overload test before taking it out on the road loaded with bikes, and then keep checking the hitch and mounting.
Overall, a light-weight trailer is a much better solution IMO.