I know of one death personally that was the result of no gauge on a pony bottle. Regs freeflow and if you aren't aware of it then you'll find you have less gas than you think and no gas if you need it. If the bottle is on your back and you can't reach the valve, you'll have to leave the valve in the ON position. This will allow all gas to escape from the bottle if a freeflow occurs or a leak at the A connection (a.k.a. "yoke") could go unnoticed.
While I am not aware of a death, I can tell of an experience where the diver lost all gas due to unnoticed free flow of "pony" bottles. However, luckily, someone (who had a side slung bottle!) was able to pass it to the diver, and was able to abort, but safely complete, the remainder of the dive using his back gas and an additional deco mix. When you plan for thigs to happen, there are ways for everyone to make it back alive.
My point is, diving with a pony back mounted can cause, in addition to the entanglement hazards already mentioned, the additional failure of an out of gas situation should there be equipment problems or an unnoticed free flowing regulator. This is why the diver should pressurize the system before entering the water, shut it off, then pressurize again after making the decent. This will cover any gas lost during entry, preventing water entry into the low pressure hose and the regulator first stage. From that point on during the dive, simply turn on and off the valve every number of minute that pass, making sure to keep the system pressurized. This way, you will loose minimal gas if gas does get lost, and you will know that the system is working properly for when you will need to depoly it.
Having a gauge with a six inch hose will keep the gauge hose from getting in the way, and it allows the diver to know just how much has remains in the tank. I am in favor of carrying them but doing so properly.
Back mounting the bottle, and leaving the pressure on opens the diver up to one of these lost gas scenarios. I wouldn't do it this way.
I've seen people use Sherwood regulators with dry bleed systems on pony bottles and leave them in the ON position. This means gas is always escaping.
The amount of gas lost in an hour of diving is somewhere about a mouthful. It really does not contribute to any significant gas loss. Of course, getting a diaphram regulator with a sealed first stage does not require the bleed of the Sherwoods. The Sherwood design is used to prevent water entery into the first stage of the regulator since it is not sealed in the first place. On the other hand, I would not worry too much about the loss of gas from the Sherwoods. They can still be shut down and then pressurized every once in a while during the dive. That will keep them bubbling but not allow large gas loss through free flowing.
For those that don't dive in high currents much, you would be surprised at how much gas a regulator can lose from free flowing in strong currents. Scootering against these currents, I have to actually adjust my regulator, effectively detuning its awesome performance, just to prevent the currents from depressing the purge valve. The effect can easily go unnoticed since the current will blow the bubbles behind you rather than where you will notice them. Slinging a bottle helps keep much better track of this than does using a back mounted pony bottle.
Stage mounting a pony, in other words carrying a stage with the same gas that you are diving in your back tank(s), allows you easy access to your valve's handwheel so you can leave the bottle turned off until you need it, easily allows you to look at the SPG of that bottle, and easily allows you to remove that bottle to pass it to another diver, untangle it, or take it off before climbing a boat ladder or walking back to your vehicle. You can also hit sharks with it if they become aggressive. I realize that's far-fetched, but it just dawned on me that if I'm not holding a camera my stage bottle is ideal so I thought I'd mention it.
I have, unfortunately, come within a second of testing my need to bump an aggressive bull shark that was charging me while I still had a lengthy deco obligation to complete. As the shark charged me, I reach for my deco bottle, unclipped the back clip, swung the bottle around, and the shark stopped charging. This all happend in a split second. Honestly, if the bull shark had continued the charge, it would have been a real horse race finish to see if I would have completed my bottle removal enough to bump him with it before he had gotten into me with his attack. The whole incident was prettty scarey, and this shark was probably a 10 foot bull. I have witnesses even on this fish story!