

I don’t think it adds any more confusion than the pre-existing pronoun confusion you already described as part of the language (your she and her example) and there is already an established answer for it (you don’t use a pronoun for one of them, you use their actual name or what you are referring to).
Pretending that it adds some grand new confusion that makes it difficult to keep up with because in very rare circumstances someone who is already really bad at communicating with pronouns (because one would have to have problems with your “she slapped her” reference to have problems with singular they/them) might have difficulty communicating what they mean by “them.”
Yeah, that’s dumber than magic underwear. That might be the dumbest religious thing (with the exception of, you know, wars) that I’ve seen. Calling all of Manhattan your (and specifically your) domicile doesn’t stretch the meaning of domicile, it completely ignores it.