So the question becomes, is there a way within the annotation spec to allow us to write simple HTML documents that blockquote portions of other texts in such a way that we can bring over the annotations of those other texts (or allow annotating them on our original page and have them pushed back to the original) within the blockquoted portions, yet still not interfere with annotating our own original document?

There might be a way. My $0.02, based on what I've tried to codify in https://web.hypothes.is/help/how-hypothesis-interacts-with-document-metadata/, is that I'm not confident I could predict or control the outcomes.