Further trials (and errors) reveal that InDesign needs the Tagged Text file to be in ANSI, not unicode. Otherwise, it places the tags as text, i.e. does not recognize the file as tagged text. This is the reason my test run failed.

However, Chinese text can not be saved in ANSI format.

So, if this tagged text idea is going to work for me at all, the script that creates the tagged text file will not only have to convert all formats into the proper tags and convert the footnotes, it would also have to save the Chinese text like this: <0x6700><0x8FD1><0x5E74><0x4E2D><0x570B><0x793E> (Is this unicode?)