Yes. Not having the employer withhold IN state taxes but pay quarterly taxes instead to IN will work. That just puts the onus on you vice the employer to pay the taxes on time.
Keep in mind the reciprocity agreement only covers salaries and wages paid by an employer. Business/self-employment income earned in MI is taxable in MI and quarterly payments would be made to MI. You would then claim a credit on your IN resident return for taxes paid to another state due to the double taxation by your resident state, IN.
Here is the MI reference. (See page 7, Reciprocal States)
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