Thanks for the quick reply! This is looking much better on iPadOS 18 beta 6. The transition from View Controller 1 to View Controller 2 is fluid and the safe area insets look correct.
I am still seeing a slight issue during the push transition from View Controller 2 to View Controller 3. View Controller 2's background is briefly visible in the top bar area before it abruptly disappears and the nav bar size jumps to its new position.