As far as your question about running it on the ground side, not sure, but from what I've learned so far, i'd be very weary of make all those ground connections in his diagram to the frame.
This is because all of your AC compenents (cdi, ignition coil) are using the frame as ground and apparently, if you start using your DC components (lights) on the same ground as your AC components then you could start having problems. For this reason it is recommended to ground ALL DC powered components directly to your batteries negative (-) and NOT to your frame.
If you followed this diagram though I am curious, has it been working out successfully?