Peter,
You are correct. The cocking handle is set at 90 degrees to the trigger mechanism. I suspect that is the result of the design of the hammer in the block. It is placed at the 6 o'clock position and it's operating rod and spring are near the bottom of the block, also at the 6 o'clock position. The operating rod for the block, and its longer spring are at the 12 o'clock position on the block. I suspect any attempt to drill a recess for the charging handle in the block in other than the 3 o'clock position would cause interference with the cavity of the block's operating rod.
In order to provide a proper position for the hammer, it must be placed in the 6 position so that it can interact with the trigger/sear/interrupter system. That leaves only the 12 position for the op rod, as placement any where else than 180 out from the hammer would create lateral forces within the tube. 180 out between the two rods and springs places the resultant force in the center of the block along the longitudinal axis allowing the block to move fore and aft without torquing left or right as it moves. These lateral forces would inhibit proper functioning of the block in its forward/ rear movement. Please check the physics on that.
It would be more accurate to design the slot for the charging handle as you noted, but I do not see how it would be possible. This highlights the one deficiency of this design: the dual stiff springs and the location of the charging handle make it extremely difficult to cock with the left hand. That makes this an ineffective combat weapon (in it's IO semi auto config). It does, however, remain in my opinion, a near faithful representation of the original STEN Mk V while keeping the ATF laws in mind.