It would be more stable with the stiff back section pointing downwards, but then I need to keep the straps out of the wheel – hence the tray idea.
If it was me I’d (if anchor points allow for secure fit):
1. Find a snugly-fitting and tough plastic (or waterproof fabric) bag in which to contain your rucksack.
2. Bungee/cargo-net the now neatly-bagged rucksack to the top of your rack
This way no strappy bother, waterproof + can face the stiff back section downwards for stability. Not keen on seat-tube racks tho (high load, potential for swingy-bother if load is heavy/clamp isn’t super-tight, IME)
ymmv. I’d instead choose a wider rack and with stays (unless bike is rear suspension, then I’d go with a Thule pack n pedal rack, tho a bit spendy)