Dear Jim,
Friction may become a problem. The PTO seal is static (friction arises between lip and the shaft). The O-ring will be static on the shaft I guess, and will rub all way around against the seal at a surface where there is supposed to be no mechanical contact or lube. In due course this could lead to the O-ring becoming stationary (shaft starts to rotate on the O-ring), or more likely, the O-ring may disintegrate due to shear friction of rubber to rubberized thermoplastic (or whatever the seal is made of).
I don't think there is a simple solution to the occurence of an inverted seal. I can think of a complex solution though. A taylored spacer attached to the sprocket by friction steer welding will not affect hardening of the sprocket. Width will be such that no friction between the spacer and outer surface of the seal occurs. The spacer/sprocket will now act on the seal lip as a stepped shaft. Downside of this solution is - apart from the cost - the fact that it's a taylored solution due to the tapered shaft and fabrication tolerances.
Obviously it's more desirable to prevent the occurence of hydraulic pressure by oil accumulation in the crankcase. A problem should always be fixed at its root. If the bike has en e-start, detaching the plug caps and spinning the starter for 60 seconds may be sufficient. For a bike which relies on a kick start for starting, draining or prolonged kicking for 5-10 minutes (?) with plugs removed will be necessary. Draining for re-use is not a good solution, IMHO.
-Knut