Thanks for posting your question.
May I know what you mean by "terminating on Inside interfaces on both ipsec peers"?
If my understanding of your question is correct, please check the following:
You can terminate the VPN connection on the inside interfaces as long as you have something like this:
OUT OUT
Router A --------------------------- Internet --------------------------- Router B
| |
| |
|--------------------------------- Private link ------------------------------- |
IN <------------------> IPsec tunnel <------------------> IN
As shown above, both inside interfaces need to communicate directly, as this is traffic to the Router.
Please let me know if this answers your question.