How exactly would the magnets need to be aligned for proper 'coupling'?
I expect with the N/S-pole faces towards the rim. So the magnet field (as it leaves the magnets face) parallel with the wheel axle.
Easy to check for yourself when the eddy currents are largest: grab a neodymium magnet and a piece of aluminium (the thicker the better). Rub the magnet over it. The magnet orientation where you feel the most drag is the one where the eddy currents are the largest. More/larger eddy currents lead to tighter coupling between the dynamo and the bicycle wheel.
I also read on the kickstart site, that this setup works with steel rims as well. How would that induce rotation in the alternator?
Steel also suffers from eddy currents. In fact, *any* electrically conductive material does. The more conductive (lower electric resistivity), the larger the eddy currents. Copper is a very good conductor, hence large eddy currents.
In steel, the effects of the eddy currents are probably harder to detect because of the large ferromagnetic effect. But definitely there.
Are you in Germany? If so, keep in mind that that 'Magnic Lite' doesn't have a StVZO approval, and probably will never be able to get one. Hence, doesn't qualify as a legal bikelight in Germany, or the Netherlands. The beam of the LED doesn't have a cut-off, radiates in all directions, hence blinds traffic. Also, a streetlegal generator needs to be able to generate 3W & 6V at a speed of 15 km/h. I suspect the Magnic Lite generates much less than that, but relies on efficient bright LEDs to produce a useful amount of light.
If you're not in Germany, NL or any other country with strict rules and regulations on bike lights , that may not be an issue for you, thought it's not nice to blind oncoming traffic anywhere, regardless of location (as that Magnic Lite would).
Personally, I love my SON28 dynohub and Philips Saferide dynamolight. No noticeable drag, lots of light without blinding oncoming traffic (it has a cut-off). StVZO approved. I ride with the lights always on, day and night, as I don't notice the extra drag of the dynamo. Incomparable to the older rim dynamos or Shimano's dynohubs. Use a proper dynohub (SON, Sanyo makes not half bad ones too, I hear) and the issue of drag/losses becomes a non-issue, below the threshold where people will notice it in practice. I've added a switch to turn lights on and off, and I can not feel *any* difference with lights on or off. Of course, there is a difference, as the watts to power the light have to come out of my legs....
Anyway, I'd use a decent dynohub and LED lamp. All the benefits of this 'Magnic Lite', little drag, but a lot of useful light. And cheaper too....