Second follow up -
Since I rolled back the Apple TV IOS as explained in my earlier post I have had no drop outs at all. This is now almost a month of stable runs and rides with more than 30 activities and not one dropout. I have the latest H3 firmware, and Zwift software, but with the rolled back IOS. I have no issues using bluetooth headphones, or other devices while Zwifting. It also doesn’t matter where I position the apple TV relative to the trainer - I have stable connection and will not be updating the IOS.
I am pretty sure all three products have poor communication handling, but it sure looks like the main failure point is the Apple IOS bluetooth code changes starting at version 14.2.
Good luck to all.