Try it out and see if it works, and that's a good idea as long as the kayak sits flush and doesn't rock from side to side. The kayak probably has a slight V to the hull which the kayak can be made to sit level with a couple of 2x2's one on each side where the blue pool noodle now is, and some pool noodles over the 2x2's.
I would look at lightening it up a bit breaking out the hack saw and cutting off the front portion of that wagon bed just in front of the center brace.
Use those friction type kayak tie down straps, not ratchet straps that tend to distort a kayak if tightened too tight.
I would probably get rid of those pvc extensions and just run the strap around the metal frame of the cart which will be more solid. That pvc pipe will give too much, and whatever you have holding it to the (tie wraps) frame may break loose.
What holds the kayak to the cart is actually the weight of the kayak resting on the cart, and the straps are snugged up just enough to hold the cart in place....What holds the cart from sliding back when you transport the kayak is having the forward strap around a rail or something topside on the kayak that will prevent the strap from slipping rearward locking it in place.
Good job, let us know how it works!
Disclaimer: Before destroying your wagon with the hacksaw, please try it out like you have it originally, and then check for when those wagons go on sale.