Paulp575-
The TIU fixed channels do not control track voltage; they convey whatever voltage is connected on the input side. So if you connect a transformer (such as the Z4000) to the fixed input and set it to 14 volts, the output will also be 14 volts. Raise (or lower) the throttle and the track voltage will correspond accordingly.
The TIU variable channels work differently; for the variable outputs the voltage to the track may not be the same as the input voltage. In this case raising or lowering the throttle will not change the track voltage; this can only be accomplished through the DCS remote.
On my setup I use a ZW connected to the Fixed 1 input only; this gives me the ability to manually set the track voltage without having to adjust anything in the DCS remote. Since I'm only using the Fixed 1 input, I can eliminate the jumper wires needed to power the TIU from another channel. As an aside I keep the fixed voltage at 14-16 volts, mainly as a precaution in the rare event the DCS signal dies and the locomotive switches back to conventional operation, complete with the customary rapid increase in speed. Setting the fixed voltage to 18 volts is perfectly OK too, but I would be cautious at 22 volts due to the increased risk of damaging the circuit boards.... and electrical shock if the track is touched the wrong way.
So with the alternate wiring diagram you can still operate your conventional locomotive with the transformer, but not with the remote. The benefit gained is being able to quickly get trains running without the added steps of setting the track voltage in the remote.
Hope this helps!
-John