If we have conceit, we function from the premise that there is some reliable persona to us that continues beyond as particular experience. In doing so we overlook the conditioned nature of our self right now as it experiences the object 'out there'. And since we assume that there is a reliable persona, then we also assume that the object has some persona to it that is also reliable. That is, we assume that the object doesn't significantly change once its passed beyond our senses. In a sense we retain an idealized conception of what that object's persona is, and project that persona beyond the experience of contact with it. I'm not saying we consciously treat external objects like this, but that this treatment stems from the same habit of inattention that blinds us to our own nature.
So when this automatic inattention is removed we notice that we change quickly based on the experience, which undermines conceit. Once conceit is undermined by seeing that we are very fluid in nature, it is no longer possible to take the stability of external objects for granted. This isn't the same as adopting the other extreme that nothing exists, but rather that all predictions of what an object may do once its passed beyond sense are based on understanding of conditionality and not on mistaken assumptions.
In terms of DO, its whole structure and all the terms derive from a need to express what we are misunderstanding and
how we can come to understand that misunderstanding. So if we wrongly assume an individual reliable self (namarupa) then we quickly see how that pits us against the world, salayatana. Now that we are pitted against the world, it is reasonable that we must organize that world into useable data, which is contact. Once we have discerned an object out in the 'world' via contact we can then ascertain whether or not that object is of positive or negative value to ourselves (vedanta). Once we know that it is pleasurable, ie positive, then we naturally wish to acquire it (tanha). Once we acquire it, we naturally wish to retain it (upadana) and thus we become obsessed with it (bhava).
But, as I suggest above, all this stems from the simplest form of conceit -- that 'I' exist.
However, this conceit is not, in itself, ignorance. Ignorance is to not understand that all things change due to conditions. But once this conceit is undermined with understanding, then the entire edifice of the DO and all the outcomes from it fall apart. But so long as we do function in line with DO, we can use it as a road map to our experience.
Above you mention that the idea of contact seems to allow that we can have knowledge of an object beyond the experience of it. To this I would suggest that we benefit most in seeing our assumptions proven wrong time and again. To be wrong time and again, and know it, is a sure way to undermine any assumption of a reliable persona in either object or experiencer.
Anyway, if I still have missed the mark, then I suppose I should bow out.
But before I do, I would like to clarify my own thoughts on the formualtion volition > consciousness > namarupa.
To me this simpler interpretation presents a few problems, one of which is that calling sankhara volition alone suggests that volition has an unmediated influence on consciousness, which is not the impression given in the canon as a whole. Rather the order seems to be consciousness coming to increase and growth based on the other four aggregates, which in turn have food, contact and volition as their chief supports. So the putting of volitions here without a mediator seems to undermine consciousness' usual dependence on the other four aggregates. Then, to put namarupa after consciousness would suggest that consciousness is more substantial than the five aggregates traditionally assigned to the term 'namarupa', which is confusing. (and don't forget the additional confusion that ensues by reduplicating in one place the aggregates elsewhere present in the DO chain).
This is not to say that sankhara should be seen as excluding volition, but rather seen as the ambiguous and all encompassing term that it really is, which includes intention, volition and also the act and the resultant effects stemming there from. But because it is all encompassing it drives home the impersonal nature of all those things that it does encompass. Then by defining namarupa as the arising of conceit we drive home the role conceit plays in our deluded cognitive process.
If we define namarupa as 'five aggregates', thus entrenching a slightly different expository construct in the middle of DO, then what does it mean if the arahant is shown to posses all five aggregates? Does that mean that their cognitive process mirrors that of the DO? After all, if this possession of the five aggregates means that they retain 'namarupa' then they might be said to still conceive in terms of objects, feelings and so on -- which doesn't fit that well with the sutta passage that you are having trouble with.
Bare in mind that this is all an interpretation, so you are certainly not bound to accept any or all of it. But for me, at this time, it is the best interpretation.