Well, the first thing to remember with any kind of a paper method like this is that it means whatever the hell you want it to mean; as long as you are clear and unambiguous about it then you're fine.
Second, there are generally two types of state machines, whose names I cannot remember (one is Mealy, I think, but I'm just an analog guy who writes software). One type has outputs which are entirely dependent on the state, and the other has outputs that are a function of the state and the input. In the case of the second type I would be less confused by a table that shows the _current_ output as a function of the _current_ state and _current_ input -- particularly if there were (shudder) input changes going on in between state transitions. Even for the first type, knowing the _current_ output given the _current_ state would, I think, be least confusing for me.
My suggestion would be to go ahead and use the notation as used in the class, and make sure that you're facile with it. As soon as you're out of that class you can do whatever the heck you want -- your reader's questions will give you guidance about whether you made the best choice.