The problem with a simple deployment override notion is that the someone DSL for a given part of the tree is far removed from the actual deployment metadata. I think the registration has to be from deployment metadata to the namespace/xpath of the domain.xml that needs to be incorporated.
It is the pickup of the MetaDataRepository domain scope value that is the issue. I'm suggesting that this needs to be an operation on the profileservice admin api to incorporate the edits into the ManagedComponent changes repository. I don't see that we can maintain two sets of xml representations. Thinking of it another way, the domain.xml is simply input for a simplified restful api on top of the profileservice ManagedComponent api.