Robert, one comment I had omitted on the 5 stage press cycle discussed earlier. The blink state (orange) is used already to identify the base pitch of the step, so it is not really free. But it is no issue.
Your suggestion is quite along the lines of what I think makes most sense. So I would only add to 2: "If polyphony (chord size) is greater than the number of notes defined in the chord, same rule applies, but add the appropriate number of rests to the pool to pick from." Seems consistent to me.
Finally, we still have the option to set the step to hard monophony using the mechanism already implemented in the beta. With this I think we cover all scenarios and open an entirely new cool playground.