Mixer valve to transfer valve installation

CarlV

I set my tub and I'm ready to rough in my plumbing. I have a mixer valve (Kohler K-304) and a transfer valve (Kohler K-728) that will go to tub faucet, shower head and hand-held shower. My mixer valve has 1/2" supply for hot and cold and 1/2" out for shower and faucet. So I'm assuming I plug one of the outs and run the other out to the transfer valve. The transfer valve has 3/4" "mixed" supply in and 3 X 1/2" outs. Can someone please explain the point of 3/4" mixed supply on a transfer valve if the mixer valve only has 1/2" out? Do I just size up from 1/2 to 3/4? Will there be any water pressure issues?

Also, does the transfer valve normally get installed above the mixer valve?

Thanks in advance for any answers you can give.