Looks good so far. I'm going to be building a similar post driver (but for 3pt) in the near future, so it's good to see someone with similar ideas. One of the simplest designs of this style post driver I have seen is the Vector Power Drive Models I and II. They have a pretty simple rope/pulley system and a good sturdy post cap/holder. I'll be roughly modeling mine after the Vector model II+ but in a slightly smaller scale to fit my small tractors.
You may have seen this site already, but here are the post drivers I am referring to: Fence Post Drivers
You can download a PDF brochure that has a lot of good pictures including some fairly close up of the mechanisms.
Thank you for the reply. I had not seen that site and have it opened up now on my other monitor to look at.
--HC