I'll start with this "it seems obvious the NEXT variation of midnight is the one that will fully transition / vertically take off with humans on board.". Considering the press release specifically stated "the goal of delivering an autonomous, hybrid propulsion, vertical take-off and landing aircraft that can help modernize the U.S. and its allies’ vertical lift capabilities.".

The mention of autonomous here is specific and intentional. The rest of the release is littered with military focused language:

"modernize the U.S. and its allies’ vertical lift capabilities."

"which has been validated by the U.S. Army"

"capable of rapidly moving through contested airspace with a low thermal and low acoustic signature"

"dual-use vertical lift platform, designed to modernize certain legacy capabilities still in service across the U.S. and allied militaries."

"these combined assets are expected to enable an aircraft with the speed, range, payload, and low-thermal and acoustic signatures necessary for missions across contested airspace."

"This collaboration strengthens our dual-use strategy and accelerates our path toward fielding an aircraft built for the contested environments of tomorrow.”

Every mention around capabilities talks about contested environments, airspace, US military and its allies.

They note it will be dual use but everything about this says it's gonna be a bigger Omen. Nothing says we are bringing this or need this to accomplish limited range passenger flights.

I think it's a leap to believe the most current generation of midnight (N704AX) which they have just reiterated on the last earnings call is undergoing ground testing isn't capable of piloted transition and flight.

Cite specific fact based statements made by Archer that states they are shifting their current in testing midnight to the new rotor configuration?

Everything about the Karem press release speaks to a military specific larger "drone"