This connection could be used if the set were to be used only for code practice, as there will be no MCW tap, of course. When using this system for MCW generation, be careful about setting the audio level into the transmitter. Too much level can result in a terrible sounding signal and may create adjacent channel interference. Not enough level will result in a signal that is hard to copy. R5 is selected according to the requirements of the transmitter.
Some radios require a low impedance load at the mic jack as a signal to go into the transmit mode.
A value of 3900 ohms works with my HTX-202. It can be much higher in value for some radios, and may be left out for others. The switch would connect to the PTT line in those cases. C2 is not needed for my radio, and R5 is connected directly to the wiper of R4. I soldered the D cell to the wires.