One main thing lay people must do is realize they are lay people, and not monastics. The second I think is realize that a lot of the Buddhist teachings are filled with allegory and contradictions that are meant to get one thinking. For example, I have been to many temples, of really all traditions, and there are flowers there that were clearly picked, and maybe even sniffed.
Also, if we are speaking logic there really is no logic in:
(i) as long as I did not kill, someone did not kill specifically for feeding me and also I did not see or hear the killing, I can eat meat; (I know this is in the suttas, but I just quoted your version)
When an animal is butchered, meant for consumption by humans, who those humans are is irrelevant to the butcher. So thinking to oneself “the butcher didn’t butcher this for me, Richard, so it’s fine” is certainly not logical, if anything it is something silly to tell oneself so one can enjoy a cheeseburger. This is like Bhutan importing meat, but not slaughtering meat in their country, it really lacks logic, but beams with “Buddhist virtue” or something along those lines.
I don’t think you are confused, because the topic of eating animals is heavily debated in Buddhist communities. My recommendation to people is to do their best to reduce their meat consumption, if you purchase meat do your best to source it from farms and places that somewhat honor that animal or treat it with respect. The best thing we can do is honor the Earth for the food it bestows upon us, whatever our diet may be, and understand that no matter what we consume (even vegetables) comes at a cost. All we can do is focus on doing the best we can. Buddhism is not about whipping oneself because they eat meat once in awhile. Personally, I do well on a vegetarian diet, and I know the world will never go vegan. It is also illogical to think that. There has never been a vegan indigenous culture, and I doubt during a period of intense and immense consumption and self-centeredness, that everybody is going to start caring about animals or saving the planet, which by the way veganism will not do.
I think it is honorable for people to consider these actions like you are pondering here, and believe me, that hair is split all the time on this forum and in other Buddhist communities.