There are a number of problems with your assessment in modern day engine design I think. First, because of IK, we cannot control orientations exactly. Newer te

There are a number of problems with your assessment in modern day engine design I think. First, because of IK, we cannot control orientations exactly. Newer techniques like motion matching/IK can generate new orientations on-the-fly, depending on what a character is doing and the character's environment. Gimbal lock matters for camera movement as well. Looking up with Euler angles is a great way to induce a seizure if not done correctly. Second, the "wild rotations" you mention has a very simple solution employed by every engine I've worked with. Basically, you just constrain the real part to be positive which fixes your interpolation on one half of the Lie-manifold which ensures the arc taken is as short as possible.