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This 10x8 variant's setup, with a Queen and Chancellor in the corners and an Archbishop in centre, beside the King, per side, strongly reminds me of the version of a setup I prefer for Greg's 12x8 variant Sosarian Chess.

https://www.chessvariants.com/play/sosarian-chess

It seems awful to have the Queen (a non-jumping piece) starting trapped in the corner; you now cannot develop it without breaking the Pawn shield, so j-side castling becomes very unattractive. Two-step castling sucks anyway, on 10-wide boards.

The first instance of putting the majors in the corners I'm aware of is Unicorn Great Chess.  This array was originally invented by David Paulowch but not yet published here when John Lewis invented it independantly (although it was already included in ChessV.)  Two-step castling makes some sence given the rooks are one square closer and thus the same distance from the king as in orthodox chess.

In the greater scheme of things it makes not so much sense, though. The purpose of castling was to efficiently cater to the common desire to get the King to safety without locking any non-jumping pieces in the corner. There is only little safety so far away from the corner, and a few extra King moves must almost certainly follow, partly defeating the purpose. Q-side castling in orthoChess is already only borderline useful, and not done very frequently, because you end up on c1 rather than b1. And you still lock in the Queen.

There is at least one way to make a bit more sense out of j-side castling in Victorian Chess, perhaps. If in a game a player can feasibly 'fianchetto' his kingside bishop (i.e. develop it to his second rank on the h-file), then after j-side castling, that player can later move his queen laterally one square on his first rank (i.e. to the i-file), doubling diagonally-moving pieces on the long diagonal, while not further moving any pawns near his king, at least for the time being. Not that this will always prove to be a quite productive maneuver for a player, however.

@ H.G.: I'd observe that if you've got a massive tome like Modern Chess Openings, which covers a lot of major chess opening lines (as well as some minor ones) for all kinds of chess openings, you may see that there are a large number of variations where at least one side castles queenside. Possibly White more often, I'd think, as he often can afford to play more aggressively - the rook comes to a central file in one move, and there's lots of cases in chess of opposite-sides castling, where the side that castles queenside often does so in order to launch a pawn storm against an enemy king castled kingside. However, sometimes one or both sides to castle queenside simply because it's safer to do so than castle kingside or stay in the centre.