I don't remember all the maths from my physics classes all those years ago, but I believe that the drop spec'ed by Winnie is based on what would happen in various emergency stop situations. With a 10" drop, it seems to me that the inertia from the toad could twist and bend the tow bar attached to the RV too easily, causing costly damage just from one hard braking event. Remember levers? And how they helped reduce force? That's what the 10" drop would become, a lever. Along with that, surge brakes don't prevent all that force from being applied in a twist to the tow bar (on the RV). Whereas electric brakes would.
If the dolly were mine, I'd have a welder make it a gooseneck so I could maintain Winnie's recommendation of no more than a 4" drop. Then I'd use electric brakes.
Winnie likely knows how strong the installed tow bar is on their own product, and how resistant it would be to twisting, so I'd trust their engineers to know what they're talking about as far as warnings.