windgen.org vawt discussion

I have been having email conversations with Peter Sharp and we have come upon a mind twister that we don't yet agree on.   The conversation has to do with the Aerodynamic transmission which is a small HAWT dragged through the air by a larger turbine to turn a generator.

The question is, does Betz limit apply to a small HAWT being dragged in a circular pattern or does the circular motion somehow help get the slowed air out of the way and reduce the back pressure that is the cause of Betz limit?

Note: this is not a question about the efficiency of the large turbine, just the efficientcy of the little HAWT.