"only problem I see is you will be getting some losses because the hole in the center of the coils appears to be smaller than the magnets that you are using."
Im fairly certain that while those small windings are not 'optimal' - they do help quite a bit and other than the added resistance there is no loss. Overall I think the increase in output outweighs the added resistance, especially in this configuration.
"The only way you could solve the problem is either use less copper, and widen the hole, increase the thickness of the coils and widen the hole,"
All of these things would only make for a less powerful machine.
"or increase the overall diameter of the design."
Yes.. that always helps ;-)