You understand wrong.
You do not lose access to your purchases. You will still have a Google Account (with your own custom domain), it's just that after the conversion from G-Suite Legacy to Workspace, if you stop paying it it will not allow you to access the "core" products (Gmail, Drive, Calendar, whatever).
Nothing stops you from moving your e-mail somewhere else but still keeping the Google Account with that domain.
I have been plagued by account problems for years, though, having signed up for services like YouTube with a personal email prior to creating the same email address in Google Workspace. I recommend avoiding it, and just using a free Gmail account for basic usage of Google docs and YouTube and your phone.
I understand it's a given to lose the purchases. I'm semi-dreading the prospect of being presented with an error message preventing the creation of a new Google Account for an email address previously under Google Workspace. This may be irrational...but it seems like a case where Murphy's Law would rear its ugly head, and typical of the "gotchas" that these legacy accounts have had to deal with when interacting with certain Google products.
And I guess the worst-case downside is that I might need to create a new Google Account with a different email address from my primary email address just for the phone and Google apps, which is awkward but isn't the end of the world.
You might miss out on some things like Calendar/Gmail, but a free Google account using an external email should preserve things like purchases. Failing to do that would seem likely to push them down the path of lawsuits and PR fiascos, and also embolden what's likely a disproportionately tech-savvy (and influential in making purchasing decisions) audience fitting the demographic that set up a domain for email 10+ years ago.
though I advise leaving it for a week or so after deleting it as it was pretty glitchy to begin with
I understand you just lose all your Google Play purchases and need to re-purchase any apps or subscriptions you want to keep. I'm assuming this will basically require an Android phone factory reset and to be setup fresh with a "new" Google account for the old email address? Is this the case?
I also understand the need to do a Google Takeout and download everything. Already got bit by this once though when I recently did a Takeout to backup all my Google Photos content: a week or so later, after I had already permanently deleted the originals, I received an email from Google saying "sorry there was a bug in Takeout and some of your large videos were omitted from your exported data". I guess you need to comb through and verify everything actually made it to the Takeout to be safe.
When you migrate an email address off of Google Apps for Your Domain to another email host or self-host, what happens to the Google Account for that email address? Is it possible to shut down the Google Apps for Your Domain service for the domain in question and then establish a new fresh Google account for the same email address (not a gmail address) that was formerly part of the Google Apps for Your Domain service?