What your diagram shows is, in essence, exactly the same as using two single pole Dual Function GFCI / AFCI breakers with only two-wire (with equipment ground conductor -- EGC) on the LOAD side of the single pole breakers. -- You could do that with your existing SqD panel, use two single pole CAFCI if you removed the three-wire shared-neutral branch circuit and installed a pair of two-wire branch circuits.
The difference in your situation is that the inspector having authority in your jurisdiction has said you can leave the Multiwire portion of the Branch Circuit without AFCI protection.
On the electrical theory side of the OBC Dual Function AFCI / GFCI in your diagram: Each OBC Dual Function AFCI / GFCI "sees" only 120 V, Line to Neutral, and "does not see" the 208 V Line to Line with its phase angle. This will absolutely work.