pic: 254/968 Transmission

[Henry_Mareck]

How does the output shaft work?

And by that i mean, it appears the shaft with the dog is the same line as the output shaft, from looking at this picture.
Because the shaft moves side to side to actuate the dog it would seem that the entire output shaft would shift from side to side. It would cause a problem if a wheel was attached to a shaft that slides from side to side each time the transmission is shifted. What kind of mechanism keeps this from happening?

Also, apparently there are two sprockets on the inside, (or one double sprocket), but there is also that big red thing sticking out one end. Is is right to assume that the red thing powers the center wheel and the two sprockets power the front and rear wheels, and that the big red thing also contains the mechanism i was wondering about earlier? and if so, why does the blue one shown on the scale not have the this mechanism?