I tried a mock up of the system a few months ago and it appears that the top of the paddles is held by two star wheels, not just one, just as Oldiron noted. One of the prongs of the star wheel pivots in the balance points of the paddle (same as the bottom one) i.e. where the holes in the paddles are, while the second top wheel runs eccentrically on a cam on the drive shaft., the ends of the star being pivoted behind the pivot point of the paddle. I know that it's as clear as mud but it's a lot simpler to make than to describe!
I also know that they scrapped the whole idea because it was too slow and clumsy anyway!
The other 'fun' thing about the Alarm was the spar torpedos (1in the bow and 2 more at about 30 degrees off the bow) were stored in tubes and projected into 'attack' mode by steam.
Tony