Is it allowed/frowned upon to create derived bundle IDs for development/stable versions of the application?

Ask the Apple Developer Relations folks directly: https://developer.apple.com/contact/topic/select

Having a couple of app versions in testing in parallel doesn't strike me as particularly unusual, whether it's due to different iOS version targets or due to overlapping app testing schedules.

But it's not something I've tried to get through Testflight.

So ask Apple. They might have suggestions for how to handle this.

Nobody can tell you in advance of any Apple App Review actions or decisions.

You can't even reason about it either. You would likely only reason in terms of reasonable usage of your app. Obviously, Apple doesn't care about reasonable use. Apple cares about frauds, scams, gambling, back-door money transfers, etc. Most people, including most developers, have no concept of the staggering amount of fraud that goes on, in plain sight, at all times. Perhaps this kind of multiple bundle ID setup has been or will be used for some kind of nefarious scheme.

Furthermore, there are a number of system behaviours that could be affected by the same app running under different bundle IDs. This is absolutely not how end users will be using your app. So why do it like this? Production is for public App Store Release. Stable is for test flight. Master (note: we are using "main" now) is for development on dedicated development devices. You'll also have a few other devices running Stable and Production.