We have a 2017 Outback without a sunroof and with the built-in roof-rack. Assuming I lay towels on the roof and have good straps, what would the arguments be against just laying the bicycles flat on the roof and strapping them down?
Bike racks are about safety and convenience.
These two go hand in hand because you can easily and securely mount the bike without thinking about how to strap it or where to strap it, etc. Having it securely mounted means the bike will not get damaged from straps pulling on the wrong places (warping a rim for example) and the car won't get dented or scratched. Since the rack is always on the car, you don't have to worry about grabbing straps and a towel - you just pop the bike on the rack and go.
So, you can just strap a bike to the roof, but you're taking some risk. Your strap could come loose. The towel could work its way out. Even with padding the pedal could put a dent in the roof. If you think it out and take your time, you can probably carry it without damage, but it's going to take more thought and time for sure.
Plenty of room in an Outback to remove the front wheel and put the bikes in the back. For me, the minimal expense of a bike rack would be good value compared to a roof repair if part of the bicycle hits it or scratches it.
In my experience, I'd recommend a towbar mounted rack (if you have a towbar). It's too easy to forget about racks on the roof and drive into a low car park. Been there, done that...