Thanks everybody for your input! I didnt think to look into the "towing" section of my manual to get my answer.
My manual says the "best" way to tow is using a flatbed.
The next best would be towing with "all 4 wheels on teh ground" in NEUTRAL.
Also did some more research on other subaru forums, it seems the concesus is that it's "ok" to tow with all 4 wheels on the ground as long as its in neutral.
AWD180 brings up a good point about the engine cooling better when the engine is on, so perhaps i'll keep EOC to a minimum or only doing it when i drive like a granny so engine temps stay low.
So as long as im not EOC extremely long distances, i should be ok.
I did try to EOC once last night, i noticed that even when the car is moving (engine off), the steering wheel is just as hard to turn as if the car is not moving without power steering. I guess its probably because it uses electric power steering. I remember on my del sol, as long as i was moving faster than 10mph, the steering wheel could turn just as easily as if the car was running.
NEXT UP: KILL SWITCH TIME!