Got a Varley in my Mk1 as well and one of the other lads has one in his Mk2 with no problem - in fact my "big old normal battery" went dead in the XR so I used my Varley in that for the Croft weekend - nee bother

The only issue is that if the alternator does fail you won't be able to run the ancilliaries for long, and if it's at night you won't get very far which is why some of the rally boys don't use them - a normal battery might be the difference of getting to the end of the stage - so, you takes your choice