After a discussion with Seb we realized both the previous options we noted are not suitable.
Option (1) where we modify datalink-management service or net-physical service wouldn't work as the root filesystem is read-only at that point and we will not be able to update datalink.conf before dlmgmtd runs and update the PVID. Option (2) doesn't work as any SMF service we introduce to do the PVID update must run before datalink-management and network-physical services. Both run before manifest-import. We need an option (3) where our new SMF service (immediately on re-configure boot after a system upgrade) can run with fileystem mounted read-write and before datalink-management service runs. Looks like this option (3) is possible after the Early Manifest Import project for SMF is available. So for now we propose the following as a short-term solution: Let dladm fail to bring-up VLANs with VID 1 and we document this change and resolution in the release notes. Once EMI integrates we will create a service to handle this update. Rishi