Just got Xenoblade Chronicles 2 on Saturday...
Loving it right now in much the same way that I loved the first...
Feels really good after having been disappointed by XCX...

Just a quick rant about the AI of a party member during the chapter 5 bosses.

Morag you had one job! You were suppose to be my parties tank against Jin and yet you kept switching your blade to one that is an DPS blade and not the damn constantly your god damn tank blade that you came with. You manage to get Rex, Zeke, and Nia almost killed god knows how many times all because you can't decide which blade to use. Tora is a much better tank then you since I actually beat the boss just by using him as the parties tank. 

Blade switching is driven by combo potential.  If an oponent is broken, they will switch to a blade that can topple.  If you setup a Blade Combo, they will switch to the theoretically best element option.  So 1) don't put DPS low agro blades on your tank cause they will come out and 2) be cognizant of the elements of the blades so you can move the blades you want to the front.  Remember characters have no class other than what their blades define them as.

New Game Plus arrives in around 2 weeks.

https://gematsu.com/2018/01/xenoblade-chronicles-2-version-1-3-0-update-launches-mid-february-adds-new-game-plus-mode

In the version 1.2.0 update, there is a bug in certain instances during and after Chapter 7 where a Blade linked with a specific Driver disappears from the Blade List (it only disappears from the list, the Blade itself does not disappear).

This is a bug that occurred during the process of adding the second playthrough element called “Advanced New Game Mode,” which will be implemented in the version 1.3.0 update planned for mid-February.

We apologize for the inconvenience for the about half a month that remains, but we are working hard on the development of the update, so please give us your patience.

More information regarding the specific updated content of version 1.3.0 will be shared leading up to its release.

I am desperate for details mostly because I want to know whether or not it resets progress on non-Story Rare Blades (assuming it does, there’s too much opportunity for major progress conflicts otherwise). If so, I need to finish what I began with Ursula before doing New Game+ and then never go past her third row of Affinity ever again.

I NEED CLOSURE!!!

Not entirely sure what you mean here but if you're asking about whether it overwrites your current playthrough I don't think it will as it most likely does what Zelda BOTW does with Master Mode and adds the new playthrough as a new option on the main title screen.

I would have thought it would be more like past Takahashi game which had New Game+ modes where your progress in the story resets to the beginning, but you retain all your levels, skills, and a portion of items/resources collected.

It's a new playthrough so you start from the beginning only it probably won't overwrite your current playthrough, reason I think they'll do this is because in NG+ that are additional features like new rare blades that get unlocked with one in particular gaining a L4 as well as the ability to send primary blades like Pyra on Merc mission and such.

I would prefer a SMT style system where you can choose certain Blades to carry over to a new game starting over from scratch.

Well, I finally finished Xenoblade Chronicles 2 and overall, it was a fun time. The characters were great, the combat system was quite fun and exciting, exploring every bit of each titan was exciting, getting rare blades and learning about them was really endearing for me, and the music is just... excellence. Although, towards the end I felt the game started to fall apart a little. The villains I felt overall were weak, with real shaky to outright weak motivations, so I didn't really feel that satisfied when I finally did overcome them. That's likely the main gripe I had with this game, but otherwise I had a real good time, and wouldn't mind returning to it again, with a JPN VA replay. Also, likely because I spent so much sidequesting, this game was quite a breeze by the end, even the final boss.