A hardware keyboard with a trackpad could have just as good an interface for moving the insertion point and selecting text as the software keyboard. Even better, really, since you wouldn’t have to use two fingers or start it with a 3D Touch force press. And, a trackpad would make this feature discoverable. An awful lot of iPad owners — most of them, probably — don’t know about the two-finger drag feature on the on-screen keyboard.
It would be a shame if Apple was thinking this limited about non-direct-input controls for iOS. For one, either of the proposed solutions in this post fail if you are not using an Apple branded keyboard. Additionally, even if it worked with an external trackpad like device — now you’ve significantly increased the complexity of the device.
I don’t have a better solution to propose here, but I will say it’s a problem which needs addressing. I just hope there is a better solution from Apple, than what Gruber proposed here.