Smoke and mirrors are smoke and mirrors. Once their nature is realised they can be discounted, unless you need to put your makeup on, or have a shave.In which case mirrors are useful. Its intention that creates Karma Vipaka, a sincere intention later seen as pertaining to something imaginary remains a sincere intention even after understanding has deepened.
The going for refuge is the door of entrance to the teachings of the Buddha.
In Nagarjuna's case, actually not very likely. That way of looking at cessation is more typical of later stratas of mahayana. The Lotus sutra is the first to allow for this possibility and Nagarjuna's bodhisambhara actually takes pain to say that the arhats in that sutra were a 'special case' and that one should not generalise this to all arhats.