Is a scholar whose work contributes substantially to my proposed project a suitable arm's length referee? I am submitting a postdoctoral application that requires an external arm's length referee to write an evaluation of the proposal to be submitted with the application. The referee should be an acknowledged specialist in the proposed area of research. I am thinking of asking a scholar who I have only met once at a conference and have no other connections with. This scholar has contributed substantial theoretical and empirical insights to my topic, and accordingly I draw on their work heavily in my proposal. In particular, I adopt a theoretical framework that they have helped develop in my field and suggest that I am advancing a study conducted by this person.
If this person agrees to serve in this role, could this reliance raise concerns to the multi-disciplinary  selection committee? In particular, I worry that the committee may think that I have biased the referee in my favour by relying strongly on their contributions, and specifically advancing their theoretical and empirical work.
Thanks for your time!
From what you describe there doesn't seem to be a problem, but who can say how others would evaluate the situation. But, consider:
You have no personal relationship to this person. They haven't contributed directly to your work other than through publishing their own work.
In fact, I would consider such a person to be an excellent judge with the necessary skepticism in making any evaluation. They know their own work (hopefully) and are in a good position to evaluate extensions of it.
But, it might be useful if that person also attests to their independence in any communication with the sponsor.