At the moment I managed to set it up nicely. I have used one channel with a Y splitter and removed one of the red wires from a ESC as it was unbalanced. I then put four mixes in as per some googling with the rudder, so I now have a 3 pos switch with throttle cut then diff and then no diff all working well but uncertain if I can achieve counter rotating with this way of setting up as in reversing AUX 1 2nd motor would work?
Like bwarz says, counter-rotation is simply a matter of unplugging any two wires between the motor and the ESC, and swapping them with one another. Test without props on.
It's personal preference, but I would suggest changing your mixes so no-differential is on the middle setting. I always like my switches to go from the least complex/difficult to fly setting to the most.
Also, you cannot get differential thrust with the ESCs on a Y-harness. The Y-harness gives the same signal to both ESCs, so there is no way to tell one to speed up or the other slow down. Each ESC will need to be plugged into its own channel.