With a good bit of help from Erik at Tony's Trains Exchange and input from a DCC forum, I made a choice for placing gaps/insulators in the "reversing wye". The hope was to allow working the woodyard on the top track while bringing chemicals in and taking paper out on the bottom two/three tracks. That is, two locos working the 2X8' extension at the same time.
As shown in the earlier post, I think we can claim success. For clarification, I chose the "green" gaps in this sketch (of colored options!):
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