Thanks for engaging in such a careful exploration of <dao> and <daoset> in EAD3. As others have noted, we removed the extended xlink apparatus from EAD3. Given what we've been able to discern regarding how <daogrp> is used, the practical impact should be minimal. It will, however, require us to update our local or consortial expectations of how we will connect related <dao>s. I think that Mark's proposal for how to use <daoset> to bind one <dao> for an embedded thumbnail and one for the link to an external digital object is a sound one.
I hope the conversation around the changes in EAD3 continues leading up to and after its release this summer!