We need a conditional override in Lightning Experience which may return a custom component/VF page or will return the standard edit behaviour. We've been investigating various options which each seem to have their own blockers/issues:

1) Rely on the VF overrides which exist in classic This has numerous issues with navigation on multi-screen overrides (meaningful retURL attributes are not available to the VF page controller, so all button presses would need to be re-developed to handle LEX)
Lightning Component which uses e.force:editRecord event This event can't have "nooverride=1" applied to it, so forces the Browser into an infinite loop, as the edit behaviour gets caught in its own override.

Here is the component controller:
 

({ 
    onInit : function(component, event, helper) { 
         /*CAUSES INFINITE LOOP IN OVERRIDE CONTEXT*/ 
        var editRecordEvent = $A.get("e.force:editRecord"); 
        editRecordEvent.setParams({ "recordId": component.get("v.recordId") }); 
        editRecordEvent.fire(); 
    } 
})

2) Lightning Component which uses lightning:navigation component This can have nooverride=1 applied, but opens the Edit modal with blank context underneath it, rather than on top of the existing context. This means that the user flow is broken (hitting cancel leaves the user on a blank page, hitting save breaks the user flow completely - pictures below (POTENTIAL BUG?))

Component

<aura:component implements="lightning:actionOverride,force:hasRecordId" access="global" >
    <lightning:Navigation aura:Id="navService" />
    <aura:handler name="init" value="{!this}" action="{!c.onInit}"/>
</aura:component>

Controller

({
    onInit : function(component, event, helper) {
        /*THIS OPENS THE MODAL IN A BLANK LIGHTNING EXPERIENCE PAGE, RATHER THAN IN THE CONTEXT OF THE CURRENT PAGE*/ 
        
        var nav = component.find("navService"); 
        var pageReference = { 
                                             "type": "standard__recordPage", 
                                             "attributes": {
                                                                  "recordId": component.get("v.recordId"), 
                                                                  "actionName": "edit"
                                                                }, 
                                             state: { 
                                                        nooverride: '1'
                                                        } 
                                          } 
        var URL = nav.navigate(pageReference); 
     }
})

This leaves the user with a modal over a blank page (the original page context is lost)


If the user cancels, they are left with a blank page


If the user hits save, they page is broken


3) Complete re-development of entire flow This has issues because lightning:recordform does not replicate the detail page layout, so we would need to manually build the edit page and keep it in-line with any page layout changes which we make in the administration interface. This is an unrealistic expectation.

Are we missing the best practice way of creating overrides which can conditionally return users to the "Standard" behaviour? This was possible in Classic but seems to be unavailable in Lightning (despite the documentation implying this should be possible.