Ven. Ñanavira takes self to be a mirage, though as a mirage it is very real.
Buddha does not take the self to be a mirage. There was never a self to begin with, not even a self that is a mirage. There was only self-view - the opinion that there is a self. There was never any self that gave rise to this opinion, there was only the contact between 3 elements that caused this opinion to appear.
That's where your misunderstanding is I think. I have no idea where you are getting this reflection between two elements. What does this mean?
It said this self-view depends on the reflection going on between what we might call "external world" or "objects" and the perception of it. I have claimed this is not how self-view originates.
Yes exactly! Experience as such as actually not subjective at all in Ven. Nv's terminology, Its ignorance that creates the illusion of subjectivity, similar to what you said. This note on Atta is describing WHAT the puttujhuna takes as his self. That subjectivity appears because he seizes upon the identity disclosed in the structure of any given experience, seizes upon it because of ignorance, taking is "as the basic principe of all subjectivity.
Experience is subjective as long as the tendency towards conceit is still present, meaning until attaining arahantship.
As for that appearing due to "seizing upon identity disclosed in the structure of any given experience" ask yourself for a moment if that is really something true, something that you can "see" or if it is just a theory with no backing in real world. Now, compare that theory to the explanation Buddha gave regarding this and you will see Buddha explanation actually can be "seen" or "seen with wisdom". It's simply the correct one.
According to Buddha, this subjectivity appears because of the existence of the tendency towards conceit, not because of ignorance. This tendency towards conceit is craving, it is craving itself. This craving is what is behind this tendency towards conceit, it is this that it is based upon. And this is why craving has to be eliminated for attaining arahantship. In Nanananda view, the solution is different and more close to "thinking your way to enlightenment". In Nanananda view you can't really fit the removal of craving and practicing of austerities. If you do that, you just do because you want to or because it's considered something good to do, not because of having a real explanation for why that is required. It's something hard to fit into his philosophy because according to him, conceit is not based on craving and is not craving itself, conceit is actually dependent on other things so other methods than those of the Buddha are required to eliminate it.
This "focal point" is 100% impermanent, suffering and not self. There is no "self that exists" in this tradition, except in the delusions of the puthujjana.
For the Arya there is no self, and there never was. The point is, WHAT the puthujjana takes as his "self" is the background or invariant that appears within that reflexive structure that is meaningful experience. It's not located anywhere because its a phenomenological negative, its "always behind your look" as Venerable N. Nanamoli says in his talks. Even when he embraces the Buddha's teaching and becomes "too quick to say there is no self, there is no self," the non Arya has likely not yet seen WHAT it is that he's still taking as self while he's busily proclaiming the impermanence of everything that appears in front of him, i.e. foreground. That's the point, and that's what Ven. N Nanamoli is getting at. It's not the impermanence of "seeing, seeing," that reveals anatta. Its the fact that "I am seeing, I am seeing" is determined by what is impermanent, and hence impermanent and not self. If we're going to relinquish self view, first we have to find WHAT we are taking as a self. This is what the practice of Sati-Sampajanna aims at in the phenomenological tradition. To address your question #1 above, self view is removed through Sati-Sampajanna and the contemplation of the higher dhamma as you put it, e.g. paticcasamuppada. But this all presupposes sila and samadhi, so there is no simple answer to the question. All three fetters break.
The removal of self view means the removal of a simple opinion. In Nanavira view, he confuses the removal of the opinion that there is a self (stream entry) with the removal of conceit.(arahantship). And it is only normal for him to do so since he has not removed self view for himself and can not understand things in a diferent way.
About the first part of your quote, there is nothing I find wrong with it, other than not being voiced as clearly as Buddha did. The way to look at this from a Buddha angle requires understanding of consciousness. Consciousness is not some form of big ball that sees everything. (that is how people believing in a self see it). Consciousness should be seen like a string of pictures that run one after the other, like the way cartoons used to be built. Every second there is a different consciousness that exists. One moment it is eye-consciousness, the next moment it might be ear-consciousness of a sound that appeared, etc. This is why the Buddha said that one would be wiser to take the body to be the self rather than consciousness cause counsciousness changes every moment.
While the way of understanding the problem and the angle of looking of Nanavira might not be good, what he has complained about is indeed a problem. Most people can easily see how their body is not their self. The body did not exist before, it was in one way when it was a baby body, it is changing right now and will be eatern by worms in the future. Therefore most assume the self is something different from the body, like something that sees it all. This is why the huge majority of people, including Nanananda, take consciousness to be the self, or consider the self to be something that exists apart from the aggregates, or consider the aggregates as a whole to be the self. But most commonly it is consciousness that they consider to be the self.
Taking it from another angle, we could say that entire structure is determined by the impermanent arrangement of consciousness-name and form which allow that structure in the first place. But knowing that doesn't remove the reflexive structure of experience, it deflates it and reveals it for what it is. Without it, there is no experience to speak of, no intentional activity, no individual (NOT a person or self). Hence, "there is focal point, its not yours. That's what not self is."
Of course knowing that doesn't remove conceit, understanding the higher dhamma only removes the opinion that there is a self. Conceit will still continue to exist because it is a tendency and it is actually craving itself. Only when craving will be fully removed will this tendency towards conceit cease to exist. What Nanananda wants to do is think his way into removing conceit, not knowing it is based on craving and actually is craving itself.
From what you wrote here, it would appear that Nanananda is taking the 5 aggregates that make up a being, parts of an engine that works in a specific way, a small part of it being presented in Patticasamupada (that's just 1 sutta out of 1500 of higher dhamma) - and considering these aggregates as a whole to be a self, and then saying they are impermanent too and therefore are not-self. This is how we get to "there is a self, and that self is impermanent therefore not-self either".
Have you ever seen the Buddha speak like that ? No, you will never hear him say that there is a self and that self is impermanent and therefore not-self. That is, as I said, a doctrine believing in a self. Even if you say "I have no self" - you are claiming there is a self that has no self. This is why Buddha was always so careful when speaking about no-self and constantly complained about people trying to misinterpret him. He was aware of this problem.
This is why I claim they believe in a self, a self that is not-self. A thing that has never been claimed by the Buddha because it is of course wrong. That focal point that he considers to be the self, the aggregates as a whole and the rules that govern their behaviour (patticasamupada etc.) do not make up a self. Same as a computer with it's metal, it's plastic, it's software, the rules that govern it's behaviour - still does not have a self. It is just an amalgamation of different components, not a self that is made out of these components.