Yeah I don't really think that there's a way to be able to run backwards and not make it look stupid. I usually don't care about the whole, "you shouldn't be able to run backwards because it's unrealistic thing", but a horse running backwards? I don't really think that can be done well.
So +1 for no running backwards.
Ravin
I know this is extremely late, sorry. but I think it's important to point out since no one else has. horses can't 'run' backwards exactly but dressage horses can be trained to kind of hop/gallop backwards at a fairly rapid pace, here's a video that demonstrates:
http://www.youtube.com/watch?v=twkghAK2guQ
as for the complaints about 'the horse part is too small' I really don't get why the horse part needs to be horse SIZED. The proportions he has here is actually very similar to what is seen in classical Greek depictions. I think it's more important that they be proportional and aesthetically pleasing than be the size of a riding horse. Technical limitations aside, if the two halves are going to be proportionate and aesthetically pleasing, either the human half has to be a lot bigger, which would make them too tall for doors and other such inconveniences, or the horse bit has to be scaled down. I prefer the horse part being smaller, personally.
btw. I left a comment on your Youtube channel (since that's where I first discovered this mod, actually) but I see that you explain the reasons for the arm swinging thing here, so, disregard that bit

But I still maintain that you should be looking to some dressage videos for reference. Regular dressage will provide a lot of reference for latteral movement (look for the 'half pass'), but there is a highly advanced school of dressage called 'Haute Ecole' which will provide reference for some more spectacular and/or unusual moves (this is what Filur up there was doing, actually. and it's not as if you can't find horses trained in Haute Ecole doing lateral movement: http://upload.wikimedia.org/wikipedia/commons/c/cc/Maestoso_Basowizza_%26_Oberbereiter_Hausberger.jpg since it's such an advanced school, they'll actually probably preform it better, it's just a more common move in regular Dressage) Haute Ecole can be done either with a rider or without, like when the Lipizzanner stallions 'dance' so it's actually very good for reference since you can find reference without a saddle. (and if the trainer is REALLY good, without a bridle or halter http://www.youtube.com/watch?v=eHaEzGz0HeE and you can see in this one, it's not true that a horse has to be moving forward in order to move sideways: http://www.youtube.com/watch?v=8BD9bc3u9ag here's another one with some good lateral movement reference http://www.youtube.com/watch?v=BkD9K1lRYbs&feature=related though with a bridle/saddle) Whether it's 'natural' for a horse is irrelevant, these guys will have human intelligence, so as long as it is physically possible, I don't see any problem. Half of doing good animation is having proper reference. horses are tricky creatures, don't try to just wing it.
eta: also, as for the joining bit, which I realize is more texturing than anything and you haven't done much with that yet, but you mention it a couple posts up. I am in the process of doing a comic which has some centaur characters. the website is down right now, but needless to say, since I am a complete anatomy nut, I have done a LOT of research into horse anatomy and how the two halves might join, and fully realize that it's a bit of a tricky problem to solve. If it helps, here's part of a model sheet of one of the characters, maybe it will help.
http://img.photobucket.com/albums/v720/jillbamfette/brom-body-mdoelsheet.jpg
same character, nicer pic, though the pic is not finished yet:
http://img.photobucket.com/albums/v720/jillbamfette/brom-javelin-bg2.jpg
kinda shows the combat possibilities if you were not limited by the upper half. ah well.
Basically, the problem comes from the fact that due to the (horse) shoulders coming so high, the (human) stomach area has to be very stretched out, right? I have never liked the look of the fur creeping up the human torso, that's mostly due to special effect limitations when they are making centaurs in live action TV shows or movies. I prefer the Greek approach, stretching the stomach down, so you have a longer area past the belly button (though logically, if they were born a centaur, they wouldn't have a belly button there, it would be on the horse bit. but bear with me, just using it as a point of reference) while making the (human) back a little bit shorter than it is on a human. the stretched out stomach helps offset this, visually.