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Does MC set the state to START even before the start() lifecycle successfully completes?

No, after -- see AbstractController::incrementState.

      try
      {
         install(context, fromState, toState);
 
         fromContexts.remove(context);
         Controller toController = context.getController();
         Set<ControllerContext> toContexts = toController.getContextsByState(toState);
         toContexts.add(context);
         context.setState(toState); // HERE