My only issue with the private server route is that i can not use product directly in VU next, having to use classic client. To eliminate risk to my primary account, could I create a second and even third account for this process?
If you are using the Next client, then that solution will only be partially effective. The official IMVU clients are all stuffed full of spyware that is designed to track you between multiple accounts. Mafia made clients have all of the spyware ripped out. Your second account solution will only work if that second account exclusively logs into mafia made clients. Otherwise they will be able to tie the second account back to your main. On the second account, you will also want to only purchase items via IMVU prepaid gift card. Otherwise they will be able to tie your accounts together via payment source.
Besides the account shutdown risk, What is the bottomless pit of money risk?
If you are just doing a small collection of a few dozen products for private use, then the pit is manageable, not easily, but manageable. If you are reselling or gifting out to a large number of people, expect the pit to swallow you within the year (have a nest egg of profits ready to dig yourself out). The accounts, the chkns, and time are the only costs, but I don't think you realize how large of a cost those are. An account is not just $10 of VIP (this alone is an entire conversation to be had in private), the chkn's don't last forever / need maintenance (expect IMVU staff to be fighting back, and your chkns to need updates to fight their updates), and the time needed to keep it all going is enough to drive all but the most dedicated and passionate crazy (training and paying minions to help is the norm, outsourcing and delegating tasks).
My only issue with the private server route is that i can not use product directly in VU next
Since the private server route decreases risk to zero, exponentially decreases cost over time, and saves numerous hours of ongoing maintenance .... it might start looking pretty good to you when all is said and done. There's a reason we send our customers down the private server route by default. The time and money spent is easily worth the cost of a couple of nice laptops that can run the classic desktop client for you and your partner.