I can't tell you that your logic differs from reality. I can tell you that my logic has been called into question before.
Crops changing dynamic range doesn't seem logical to me either. Maybe it depends on what you do with the crop. If I crop in post and view or print the file at the same magnification as before the crop (rather than enlarging it to make up for the reduced size) then I see no difference.
If I shoot the same shot in DX mode (same exposure, distance, setting and light) then I do see a slight difference. Maybe this is because the DX mode is by default enlarged in post software to match the FX size.
And that may be what David is describing. In practical use though, my crops still need to fit the same area on a collateral piece or site that an uncropped photo would, so I'm enlarging the crop to fit the hole. I do see that enlarging my photos degrades them.
Reduced dynamic range using DX mode could also be, as you grant, something involving circuitry or software. I'm hoping someone has a definitive answer on this.
Meanwhile I'll just keep shooting FX. When I think a DX crop may be beneficial, I'll try to reduce my ISO by 2/3 of a stop at the expense of a longer exposure to make up for any reduced dynamic range, unless I'm already shooting at ISO 100. Because I haven't learned to trust the 'Lo' settings. Nikon must not trust them either or they would have just called it ISO 50 instead of Lo 1.