I think I figured it out. You can run your own tests with
drudgereport.com, for instance. If the page loads an IFRAME and then inside that IFRAME calls something you are filtering, then excludedInitiatorDomains won't do you any good and the content will still get filtered. That's exactly what's happening. I proved it by going to the page, clicking Network tab in Dev Tools, then checking Preserve Log and Blocked Requests. When I look at the Initiator column, it's anything but
drudgereport.com.
I can switch from updateDynamicRules to updateSessionRules and then gain access to excludedTabIds, but the problem there is that I would have to refresh the page once you arrive there in order for me to detect that you browsed to a domain that was whitelisted (no filter), drop rules, reapply rules with your tab ID, then refresh the page. That's not going to work.
I basically want the action to be "Anything on this page needs to not be filtered, no matter what," but the only way to do that is with excludedTabIds as far as I can tell (unless someone shows me otherwise), but then I have the problem of having to intercept (before content loads) that someone surfed to a whitelisted domain, drop rules, get tab id, added it into excludedTabIds, and then refresh the page again, which users will not like because of the page refresh.