Ken_TryonThank you for your reply! Actually I have OneDrive set up now to cache on the external drive, and I'll see how that works - if I get wonky behavior I can always unlink the machine and then relink with the cache on the system drive. I've (maybe) solved my space problem by offloading everything in ~/Documents onto the external drive. That saves me about 100 GB of space on the internal drive. I don't care about backing up my OneDrive files with Time Machine - in fact, I have the entire cache excluded from backup. I also had the impression from the blog posts here that the syncing problems were due to limitations in File Provider, and I hope Apple fixes this at some point. The hard part is convincing them and their devotees that there are real problems with their implementation - one Apple advisor on their support community forum tells me this must be a OneDrive bug. Who to believe?
BTW, with the cache on the external drive it appears there is ALSO a copy of it in ~/Library/CloudStorage, the same as when the cache is actually in the home directory, though it seems to be taking up no space on the drive. Deleting files in that copy effectively removes them in the cache, so it must be some kind of link to the actual cache. But I wonder if I need to exclude THAT location as well to prevent Time Machine from backing up the contents of the cache?