If you’re worried about movement, and I don’t really think you need to be, leave smallest space in between your decorate ‘under pieces’ and the legs. That panel is small enough, overall, that I just don’t see having enough seasonal movement for it to be an issue. The fact that it’s going to live outside may temper that opinion a bit, but a small gap would fix the issues. 

As for your option of leaving the legs on the outside and proud: you could run an apron between the legs, then set the seat portion on top of the apron. If I was worried about strength, which I don’t think I would be if you’re using dominoes or M&T, you could also run a domino between the seat panel and the leg…so you’d have a domino connection between the apron and leg, supporting the seat on top of the apron, and an extra domino connecting the seat and legs. That’s a lot of contact points, especially if the whole this is also glued up. If you wanted to do something kinda decorative, you could do an exposed half lap joint for the apron into the legs…or maybe even a half lap decorated as a dovetail or something. A half lapped joint is damn near bullet proof, especially if it’s supported/glues against the seat. 

Just thoughts….

Ryan/// ~sigh~ I blew up another bowl. Moke told me "I made the inside bigger than the outside".