Hi Jay,
You could use the Database Accelerator for your compromise solution. It's a code-less solution.
Anyway, to respond to your original post ... thanks for the repro steps. I think you have a new scenario here. I have never heard of anyone binding to the data sheet in that way and I wonder if it is even supported. There's probably some issue with SharePoint. I will check with MS and let you know what I find. Should take a day or so.
Patrick Halstead [InfoPath MVP]
InfoPathDev
Patrick Halstead
Project Manager at Qdabra