Yeah, I think you should still "snake" it. Otherwise the guys picking in the first 2-3 picks just get that much more of an advantage over the guys in the middle, and especially over the guys at the end. Some people even use a method nowadays called the Third Round Reversal that makes it so the number one pick is the first overall, last pick in the second AND last pick the 3rd because of the significant advantage of picking in that position, so I would definitely say you don't want to go past the "middle" ground of the regular snake draft.
Also, you might want to consider having some weight on keepers' effect on future draft picks lost - it's a little steep to automatically lose a 1st rounder for a keeper - maybe try something like you either lose the round where you picked the guy, or if you want a penalty you could say you lose a round or two higher. So, if someone takes Felix Jones in the 5th and he explodes into the top 10 and is a keeper next year, you'd use somewhere between a 3rd- and 5th-round pick on him.
Av/sig by deluxe_247