First, imagine taking the insulator in the lower right corner and moving it up to just the other side of the turnout, on the straight branch. Then, you would need another insulator on the curved branch. Finally, move both of those insulators up just before the next turnout on each track. There is still only one connection required to the reverser, but the turnout in the lower right moves inside the reversing section, so you need to have an insulator on each branch, rather than a single one at the point end of the turnout.
The auto-reverser will flip the polarity of the loop whenever it senses a polarity mis-match on either end of the loop. In DCC with an auto-reverse unit, the loop is usually wired up to be the part that flips, and the main line stays the same. (You could wire it so that the main line flips, but that's not usually the best way to do it, for a number of reasons.) So, when the train first enters the loop, the polarity may or may not flip, depending on which way it was left the last time a train went through the loop. Then, when the train gets to the other side, the loop's polarity will flip again, to line it up with the outgoing track. In DCC, loco direction is controlled by the decoder, not by the polarity of the track. (Exception: If you are running a DC locomotive on your DCC layout as Engine Zero, this will not work. The DC locomotive's direction is still controlled by the polarity of the track, even in DCC.)
So, that's the simple case. You're right about that metal-wheel caboose. If it is over the "entrance" insulator at the same time as the engine is over the "exit" insulator, then you've got a problem. The auto-reverser will not be able to keep both sides happy, and you'll end up with a short circuit.