the cold line from evaporator to compressor will gain tons of heat on a super hot day even with insulation. if they put the compressor right outside the evaporator, both of the long lines will be hot and there will be a bit of free cooling. why don't they do something so obvious? there must be a very good reason right?
What you describe is quite common where there isn't any problem with power and noise. It requires a bit more sophistication to manage the superheat. And yes, you need to quiet the thing some. I replaced a '60s era 20 ton compressor in a restaurant's dining room AC closet while they were serving dinner. This is also a good idea near the coast to keep the salt off the thing and protect the expensive compressor from hurricanes. I've only seen it on bigger systems, though.