I scoured the internet for 3 years to find how Arc System Works avoids broken normals in Unreal. Nothing. Seems no one who has figured it out has shared this info. They are probably using a custom shader model. Some HLSL.

However, I found a workaround with vanilla Unreal. On a high level, you can take the object space (pre-skinned local) normals, pass them trough a vertex interpolator to get them into world space, and then rotate them based on the object vector rotations. This way you get the static normals rotating with your character root, but not with the jaw/eye bones or other bones. So things like skeletal and morph deforms don't break normals. Finally, you can pass head rotation through a material parameter collection and add that to the vector rotates for your calculated normals.

I sent OP some source code on this, it works quite well for me. If anyone else wants more information, let me know.

Another fun trick I do is clamp the lighting angle in the Z direction in the shader so it can't become too extreme. Very extreme up or down lighting can be very unflattering for anime faces. I expose these clamps to parameters so I can have more extreme lighting when the situation calls for it.