Lack of clue
Yeah, the LiPO battery thing is stupid. Lots of little cells that you need charge balancing circuitry, and cell protection circuitry for instead of a single, big sealed lead acid battery? Yeah, that'll keep down your bill of materials - not!
The problem is that this seems to be being driven by software weanies and there's no evidence of any power electronics folk's input in the specifications. The fact that they find managing a bypass switch challenging is evidence of that:
"This may have to be a mechanical switch (possibly flipped by a solenoid, but not a traditional spring-loaded relay that resets to a specific state when power is removed). Implementing the option in software seems hard, especially if this UPS is supposed to protect against intermittent voltages and overvoltages as well (i.e. cases where bypass is the wrong response and there’s no software running due to lack of power)."
i.e. They have never heard of latching contactors or solid state relays (i.e. triacs).
Further evidence for the supposition that this is just a bunch of programmers are the facts that the current specification has no, zero, zip, mention of the options for power conversion technology to be used, or the type of output waveform to be supported, or any of the basic questions that an Electronic Engineer would ask first. Like, they've said 300W for 15 minutes (based on measurements apparently) but no mention is made of a figure in VA - probably because they have zero clue what a "power factor" is.
They need to get some power electronics engineering experience on board very fast or this is going to become another "Arduino Maker Project" designed by programmers. Do that on mains attached power electronics and watch your house burn down.