Further testing without borg, but rather just copying files in the macOS Finder, has made some behaviors apparent.
I am able to copy smaller files (seemingly less < 279 MB) without problem if they have no xattr associated with them, but larger files produce errors, or files with xattr, both of which throw this up in the Finder GUI:
"The operation can’t be completed because an unexpected error occurred (error code 100006)."
When I look up this error code, it's really a POSIX error, corresponding to:
kPOSIXErrorENXIO = 100006, /* Device not configured */
These errors are perhaps caused by the "DesktopServicesHelper" part of the macOS sandbox architecture. For example, by default the sandbox daemon won't let you "file-read-metadata", in this case xattr, on /mnt directories. The behavior seems different if I setup a mount point in a home directory. I'm then able to copy smaller files with xattr.
In addition, mounting the volume as root or enabling "--allow-others" may be necessary to satisfy "DesktopServicesHelper" or "System Policy" enforced by the sandbox daemon (sandboxd).
See the following...
https://osxfuse.github.io/2015/09/25/OSXFUSE-2.8.1.html
I was able to use the rclone mount option: "--enable-others" only after changing the osxfuse admin group to the number of my primary group.
Found that info in the osxfuse mount options:
So, in my case:
$ sudo sysctl -w vfs.generic.osxfuse.tunables.admin_group=29222 # set
vfs.generic.osxfuse.tunables.admin_group: 80 -> 29222
IMPORTANT TO NOTE -- I am able to copy files of large sizes through the command line using Terminal.
These same files (400-500+ MB) I am NOT able to copy through the Finder, which still error out as "error code 100006" as per above. This is despite changing the osxfuse admin group, and keeping the mount point inside my user home directory.
Also, to be clear, the xattr are not copied over to the GDrive destination, but without this setup correctly, it won't enable me to copy the naked file without the extended attributes.