That is a great idea, and I actually have a board with this functionality that I built. It's standard 60% with split right shift opposite of your split, so shift on left 1.75u and fn on right 1u. Clicking function toggles the arrow cluster (shift=Up, window=left, menu=down, ctrl=right). I use it every now and then but what you REALLY need if you have this is a led indicator to let you know if it's on or off. I can't stress this enough. I'm almost to the point of abandoning the toggle and just reassigning the Fn key because I get frustrated when I forget it's is turned on.
So, your original image with led indicators is a good solution in that case. The other option would be to put an on board led behind the toggle key and but a 1u windowed key there. Or, like the V60 does with this same idea, just make it bright and let it shine under the keys.