Thanks again for the reply TIG. Unfortunately, I see the same issues. To verify it wasn't the small differences in faces from DropVertices, I made a copy of the bottom textured model and moved it directly above. I removed the top materials and then ran the script. UV issue is still there. Have you actually downloaded the file and run this script with the top mesh faces selected? Have you seen the UV issues or did it look okay for you? Honestly, I guess I will just give up at this point.
I have figured out another sort of workaround where I make a sandbox mesh above the original, run this script we wrote (which does perfectly with the texture and UVs when the raycast is from a flat surface), then use UVToolkit to save the UVs, then drop the vertices and then restore the UVs. It works. A few extra steps but this script has been enough of a headache.
Regardless, thanks for your help.