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Hmm, looks like were on to something then! Don’t know why someone hasn’t tried or recommended this before
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Because it's fraught with potential problems. We're dealing with a wacky auto servo connection that acts as both a balanced and unbalanced interface using the same jacks. Hard to say how the 4 circuits will react (2 input / 2 output).
The RCA to XLR trick in this case hinges on not activating the pin 1 to pin 3 short, because that would connect the troublesome shield of the source device to the shield of the BFD. So the auto servo level control is not activated and so the difference signal will generally be lower.
I'd be trying to find the ground loop and eliminate it if possible.
burcek