They will still need to do supersonic retro propulsion, ...

No, they will not, if they can dissipate energy using a heat shield, the same way that a Dragon capsule does. Remember, the second stage must return from orbit. What it goes through is far more similar to what the Dragon capsule goes through on reentry than what the first stage goes through. The second stage has too much velocity, and kinetic energy, for it to carry enough fuel to slow down using rocket propulsion. The only viable option is a heat shield.

Given that the second stage must reenter like a Dragon capsule, stability is a serious problem. My proposed solution is to spin the stage up to at least 100 RPM, and possibly several hundred RPM, like a rifle bullet. Some supersonic bullets are aerodynamically unstable, but due to spin manage to keep nose forward at speeds of ~Mach 2.5 or more. I know of no reason why this should not also work during orbital reentry.

Once traveling at subsonic speeds, the spin can be taken off by angled grid fins. Making the stage swap ends to a tail first configuration at relatively low speeds should be possible. A final landing burn using 3 SuperDracos, probably doing pulsed firings, might work. Another possibility is to fly the stage nose first into a net or a "bouncy castle," at sea, similar to how SpaceX has said they will recover fairing halfs.