The MOV's are definitely a problem with a corner grounded system and if you leave itas a floating ground you can add ground fault lights so you know if there is a fault.
I did decide to go with a proper step up transformer with a 480Y output. Since I'm not on a long lease in the building upgrading the service is not a sensible plan right now, so this seemed like the closest I could get to doing it right. I wanted a better ground fault solution than the indicator lights and nobody was chiming in with something cheap and effective. The cost difference between a used 480D PRI/240D SEC and the brand new 240D PRI/480Y SEC that I bought was about $1000, which is less than the cost of buying one replacement for the larger VFD.
If I have a proper purpose built step-up transformer, obviously the inrush current will be less than a reverse fed step-down transformer, but I'm not sure how much less. I'd rather not go all the way up to 125% on the overcurrent protection if I don't have to.