”...wouldn't the butchers shop be a little out of the main way, near the cattle yards, with his block, hooks and shambles by a stream, out the back? There was a law against butchers setting up shop on the highway in medieval times - was it still in force? Was the main street of Highbury a highway, anyway?”

I don't know about medieval laws, but the following may be of interest:

About four miles from JA's home at Chawton is the pretty village of Selborne. It is set along the road between the market towns of Alton and Petersfield. In the middle of the village on the narrow main street is a 16th century house called “The Wakes”, now a museum, where the naturalist and clergyman Gilbert White (1720-1793) lived for most of his life. White is best known for his book “The Natural History of Selborne”, first published in 1789.

The front rooms of The Wakes are very close to the road, and a butcher's premises lay directly opposite, including a yard where slaughtering, skinning etc took place. (Note there was no running water on the site.) In 1756 Gilbert White wrote in his Garden Calendar that he had planted four lime trees on the opposite side of the road “to hide the sight of blood and filth from ye windows”. The premises continued to be used as a butcher's for 140 years or more

According to staff at The Wakes, it is not known whether there was a separate butcher's shop on the site in White's time, but at some point a small building with a long front porch formed by very deep eaves supported on posts was erected for this purpose directly behind the lime trees. This illustration from a 1898 edition of “The Natural History of Selborne” shows the view from The Wakes front rooms in the late 19th century.

You can see the sides of meat hanging in the open air under the porch of the butcher's shop. By 1900 a different building which was then used as the shop was destroyed by fire. This photograph clearly shows the three remaining lime trees on the left, which had by then lost their lower branches, and the former butcher's shop behind them. Between this and the fire damaged newer shop, the butcher's yard is by now decently screened behind high wooden gates.

Here is a modern photo of The Wakes, with two surviving lime trees planted by Gilbert White visible across the road. (Scroll down the page to the fourth image.)

I think Highbury, “a populous village almost amounting to a town”, was somewhat larger than Selborne, which had 313 inhabitants in 1783 (676 in the whole parish), though not as big as Alton and Petersfield, which were busy market towns on major coaching routes with populations of about 2000 at the 1801 census.

Although this information brackets our period rather than hitting it exactly it may offer some insights into the sort of butcher's premises which JA would have known. The connections with JA and with Emma are rather more direct. JA was surely familiar with the picturesque village of Selborne just a few miles from her home. Gilbert White knew and visited with JA's father when the latter was Vicar of Steventon. From 1761 to 1784 White was curate at All Saints' Church, Upper Farringdon, a parish between Chawton and Selborne. A few decades later JA was friends (see eg Brabourne letter LVIII) with the family of the Rector of Farringdon John Benn, who's impoverished sister Mary lived for a time in Chawton. It has been suggested (Austen L Archives) that Mary Benn may have been the inspiration for the character of Miss Bates.