I think the reporting method derives from the definition of net earnings from self-employment in the tax code and in the Social Security code. As you found, the instructions for line 19 of Schedule C clearly indicate that the self-employed individual's retirement deduction must be reported on Schedule 1, not on line 19.
Entering any part of the self-employed individual's retirement deduction on line 19 would change net earnings which would change the permissible employer contribution which would change the amount on line 19, a circular calculation.
