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Notes -
I do think you have to coordinate action somehow to avoid prisoner's dilemma issues.
But we probably can.
Consider affirmative action. If you forcibly reduce competition, you reduce the selection pressure, which can help to remove the perverse incentives from the prisoner's dilemma table.
Indirect issues are a larger concern, such as biodiversity, second order effects of first order selections (as in your exploitation case), genetic fads, over-optimization for values initially perceived as important, and so on. I do think we should take things somewhat slow and keep hold of the sequenced genomes of older generations in case we need to backtrack. Your focus on full societal collapse is interesting. If a silent value shift occurs you might not be able to backtrack. But... I think we have to deal with that either way. As long as things keep changing we have to deal with alignment problems and stability. As long as there is any risk of societal collapse we should be diversifying our assets and making sure we can rebuild from as small a piece as possible. I think having smarter children is going to be a net positive regarding these issues. And though you worry about exploitation- cooperation is a very useful trait as well that is likely to be selected for, both explicitly and implicitly.
I don't think it's quite that easy. Embryo selection doesn't result in having children you could not in principle have. It's like cheating at a speedrun by raising an item drop rate. Say we sequence the genes of all children (who's sequencing them? Are we letting the government mandate this?). The smart thing to do is cheat just enough that you have an unlikely child, but not an impossible one. If every rich family has a 1 in 10 child and two average children, you can run the statistics and figure out what percentage of them are cheating, but it's very hard to tell who's cheating.
And that's assuming they're raising their own children.
You can mail sperm. You can transfer gene sequences over the internet. You can get a surrogate (or a secret lover who wants your babies) in another country.
Also- yes imprisonment may dissuade the rich, or at least slow them down and force them to use secret tactics. But right now the rich just don't end up getting imprisoned for the same things the poor do. And I think getting the system to actually prosecute them on an issue with plausible deniability is going to be really difficult.
There are definitely some options beyond 1,2, and 3 in concept, for instance- Eugenics getting banned in all countries would help. A full time panopticon monitoring the wealthy would help. Everyone being socially aligned such that everyone coordinates their actions and just decides not to do eugenics would solve it (and you'd get world peace as a bonus!).
But I put those in the same category of 'solutions' that are not realistic enough to be viable.
There might be a 4), but I don't think your variant on 3) works well enough, and the other ideas I just shared are even less likely to happen. If you find a better 4, we can talk about it. Though, I myself am still pro gene-editing right now. Even if we can stop it, I'm likely still going to be arguing for why we shouldn't.
The way I see it, if you graph out the distribution of psychological makeup in N-dimensional space, there's a certain window where society doesn't explode. We don't know where the boundaries are, but we know that we're inside it and that natural selection isn't going to move us out of it very fast. But widespread eugenics can.
Check whether the babies implanted overseas. Check whether they transferred money to/were present at foreign IVF clinics (which will be known, because unlicensed medical practice is illegal everywhere so you might as well not go abroad at all). The existence of the baby actually makes this significantly easier than prosecuting e.g. child-brothel tourism.
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