Looks like they used .5" velco that serves as a flap to hold items against the inner side of the belt, but actual contact area when packed is about half that since it bulges a little.

The space blanket does take up most of the available space, only about 1.5" left on either side for items, so I'd probably just stick it in a pocket as you indicate.

Otherwise though I rather like it.

I've picked up some 1.75" webbing and will see if I can find someone with a heavy duty sewing machine to DIY a test article, but that little bit of extra room looks like it will make a big difference.