First: You are right in assuming altitude or any movement through the air will be ignored completely. That would be the next step in the learning process, but outside the purpose of this "orientation simulator".
As for the disc, it can also be ignored (for this purpose) as it will always be close enough to perpendicular to the mast.
The idea about the line rotating around a fixed point is based on how a heli flips around: When a heli flips, it flips around its centre of gravity, which will be close enough to the main mast to say it is _on_ the main mast. The line is really an imaginary line between CG and the rotor hub but like I said, if CG is on the mast, then that imaginary line will be where the mast is.
Bottom line is: 4 things are needed: CG (the fixed point), a line (the mast) and the moving end of that line (the disc hub) and finally the nose indicator. Everything else can be ignored completely.
As for simple: That's what I want
. A simplified "physics model" that only shows what I want to study and nothing else.