No, compensation/springing won't work with fixed rods but you can articulate them on the centre crankpin by cutting one layer behind the middle and the other layer in front of it. It's not mentioned in the instructions because this early kit was only designed to be built rigid. All our more recent ones are designed with compensation in mind. This is what it looks like from the top.
More than one axle on a knife edge is unstable as you suspect.