Kirk,
I agree - except that in a perfect world, Lightroom would use the XML schema exactly as you have, and this issue would be resolved. I agree that this new MGW schema brings zero benefit to the table. My guess is that Adobe took their poorly thought out system to the MGW and used their gorilla-clout to have it immortalized as an MWG recommendation, to everyone else's detriment. I tried for several years to get the Adobe teams to improve their metadata handling, to little avail. So yea, I think it is likely the photo community is stuck with it, even though it breaks a lot of very good software, yours included.
What you describe sounds reasonable. I have several plane flights tomorrow and I'll try to walk it through and see if I find any potential problems with the approach you describe, or an alternative approach. I will also make some specific test files to try to help follow exactly where data is ending up. It is very frustrating and a waste of resources, though, to have to even consider patches like this. Thanks for listening.
--Rich