Well that’s awesome, I managed to get this working just like I needed.
I did it slightly different than your steps (I already had the main clips laid out on the timeline in a certain order), and I got it to insert on a different track, just how I wanted.
Now, for part 2.
Let’s say my transition clip is 20 frames long in total. 10 frames in the middle are supposed to go between each clip, while 5 frames on each side overlap the clips below it.
So I begin by trimming the clip down to the 10 frames that need to go in the middle, this way the insert edits put the correct amount of space.
But now, is there any way to go back and drag the handles out on each one, to get those extra 5 frames on each side?