Yes you can still keep the non-derailing feature if you use toggles to turn off center rail power... I don't understand what MTH is describing, but I doubt it's about creating blocks by insulating the outside rails...
I think you're making it much harder than it should be.
Switch the hot.
One SPDT toggle to select TIU or Z-1000 conventional... I'd probably use a center off type as well.
3 on\off type toggles for the 3 blocks.