Autothermal reactors, coupling endothermic and exothermic reactions in parallel channels, represent one of the most promising technologies for hydrogen production. Building our our prior results, the present work focuses on hydrogen generation in counter-current autothermal reactors. Using a first-principles model, we demonstrate that simply reversing the flow in a reactor designed for co-current operation leads to the formation of hot spots and a decrease in thermal efficiency. Thus, we propose a redesign strategy based on establishing the optimal length of the catalytic surface for both the reforming and the combustion channels, with the objective of minimizing the difference between the channel temperatures. We demonstrate that the redesigned reactor exhibits superior steady state performance and improved dynamic operability. Finally, in view of facilitating model-based controller design, we introduce a reduced-order model based observer for the counter-current autothermal reactor and validate its operation via a simulation study.