First off--unless your chest is 70" I doubt seriously that you have a true waist measurment of 42" at 270lbs and 5'5". I only bring this up to take an honest look at your situation.
Second--you may want to modify this workout especially if cardio is not in your plans. I don't care what anyone says, this is not a fat loss/weight loss workout.
Third--screw the 'loss of muscle argument'. My unprofessional guess would be that you are carrying 70-90lbs of fat on you. Are you willing at this point to shave 10lbs of muscle to lose 50 lbs of fat. Your perception of your body seems skewed. You'll actually look bigger minus the weight/fat.
watch what you eat
time your meals
see a theme here. 90% of your plan has to revolve around diet. I applaud your progress, but given the time span and your goal of weight/fat loss, I'd say your diet is not very good. Training your ass off with a goal of weight loss should result in better progress. To me this says your diet is way out of whack. Keep a log. Don't forget the handful of m&m's, peanuts, glass of juice/milk, coffee w/cream&sugar.......
You are probably consuming more than you believe. Definately incorporate veggies and fruits. Fiber and phytochemicals are crucial to your plan.