Is this configuration excessively intricate? ASUS XT8 access points along with XD4 devices.

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[tgl]

To address this, I've come up with a solution. I will connect XD4 devices to the LAN ports of the XT8 access points and create a separate SSID specifically for IoT devices. This way, I can also have a guest network set up if needed.

Well, that will give you a separate SSID for the IoT devices, but it's not clear to me that it gives you any actual security benefit. What stops the IoT gear from accessing all the rest of your LAN? Even if you have the XD4s set in router mode rather than AP mode, by default they will see the rest of your LAN as just part of that big internet out there.

Solutions for this do exist, ie you can in principle block access to the address space of your LAN. However, I'm not sure if the XD4 firmware is flexible enough to let you do that --- I'm not familiar with that particular model. You might need to get some other make of router.

Another possibility is to plug the XD4s directly into the Firewalla Gold and write firewall rules on that to prevent access from the XD4s to the rest of your LAN. However, you might be short some ports on the Firewalla --- I think it only has 4 ports including the WAN port. Where you might end up is with the XD4s plugged directly into the Firewalla, and its remaining port connected to a plain ethernet switch, where you connect the XT8s and any other trusted wired gear.