I would suspect that it would need to be in line with the receiver to be considered an arm brace rather than a stock by anybody, the Feds included... which would then make the sights useless when the gun is shouldered, as they would be under your sight line. You would want to get a picatinny mount with a red dot in an AR-height mount for this to be any kind of a viable project, IMO.
Also, keep in mind that though the Feds consider the arm brace not to be a stock, there are a lot of different SBR laws on the state level, and the Feds' opinions have little to no bearing on how these state laws would be interpreted in a state court. For the most part we really don't know how this would shake out, as there have to my knowledge not been any appellate-level decisions on this issue in any state, with the SB-15 being such a new product. As a criminal defense attorney, I expect that this will not be the case for long.