Yes, you're absolutely right: That added circuitry is the mux needed to support the added RAM. As to why this wasn't done from the beginning, we have once again design by fiat. Jobs was fixated on the notion of the Mac as a complete, finished consumer item, like a toaster. His philosophy of Mac-as-toaster precluded allowing upgrades. That's why Torx screws were chosen, and no upgrade port was included. It drove his engineering team nuts -- they knew that computers weren't toasters, and that upgrades of computers would forever be the norm. They tried all sorts of sneaky things, like putting in a "diagnostic port" that just happened to connect to the CPU bus pins in a way that would enable upgrades. Jobs saw through this trick, and nixed it. He only permitted larger ram when forced to by the software vendors. And even then, he insisted that the 512K Mac not be expandable beyond that capacity.

I do have a schematic somewhere showing exactly how that jumper is hooked up. If you don't mind a potentially unbounded amount of time for me to dig it up, I'd happily send you a copy. The hybrid 128/512 board would indeed be an ideal candidate for you to perform the dip-switch experiment.

As to 64K simms, I've never seen one. I suspect that they do not exist. However, were you to kludge one, my guess is that, with possible tweaking to the address decoder, you could probably make the Plus use them (although not every Plus function would necessarily work), given how little the Plus fundamentally differs from its ancestors. You might have to change the ROMs too (then again, maybe not). It would be a fun experiment for you to try for us.