"If the lady is in good position for dancing in normal closed hold, how can she maintain this when dancing outside partner, where clearly the separation of the hips must be greater (even with CBM)."
The answer is that the seperation of the hips should not be greater - at least not the side-to-side seperation.
Outside partner is a direction of movement relative your your body alignment, and it is a stretch within your body - but it is not a seperation from your partner.
It's easiest to learn for a lowered action like at the end of a lock step (lady backwards). Stand sort of as if you were shooting a bow and arrow - left foot forward, right back, right knee bent diagonally forward and left, left shoulder forward and left, right hip pulled back and creased. Stretch into that position and take the backwards step in CBMP with the left. Or take a fowards step in CBMP with the right - it's basically the same.
Then learn to do the same thing on the ball of the foot at weave height. Or substantially more difficult, rolling through the foot over an extended leg, such as in the feather.