Mm. I've seen this theory a few times before, and it's certainly got some strong evidence backing it up. Still, there's always a chance they're including the sequence for nostalgic reasons, but I definitely wouldn't shoot down the idea that Shenmue III opens with a quick recap of Disk 4.
I'm one of those strongly shipping SIII starts at gd4, just because I hope they change the fucking flying sword and lasers and bring it a little more to earth, also guilin was such a change of pace that feels different from SII and a nice start (since people picking up the game without playing SII would not know what the fuck is happening. If SIII starts at disk 4 they only need to know "you followed your father killer to here", also it explains a bit about the mirrors and shit.
Would be a wise choice IMO.
Pretty sure I heard Yu talk about the cave scene recently. It sounded like he would leave it the same, but wouldn't have "magic" in the continued story. He also made sure he differentiated magic from Chi, as Chi is real, he gave an example of monks. You can see a test done at a university on youtube of monks raising their body temperature so high that when wet towels were placed on them they could make the water steam off. Pretty cool shit.
Why would he change the canon? That was a very spiritual place, where the mirrors were created, why do you think Lan Di wants the mirrors? I don't think he wants them because they look pretty. They have a purpose...