Solved it through a bit of reverse-engineering - there's a hidden option! Now both RSI and EthernetKRLXML can be run cleanly via inside OfficeLite.
Here is an archive(clickable link) that contains a fast and reliable tool(written in C++) that will let you run RSI inside OfficeLite, as well as any other UDP software package.
There is a full installation guide and readme inside as well.
An excerpt if someone wants to waste the time recreating the tool:
1 - You need to add the following line under the ONLYSEND line in RSI_EthernetConfig.xml:
<ONLYSEND>FALSE</ONLYSEND>
<PROTOCOL>UDP(vxsock)</PROTOCOL> <---- add this
2 - Set the IP address to 192.168.0.1, keep the port default
3 - Make a bidirectional UDP proxy to shove it out the other network interface(or get the archive)
Changed the title of the thread from “Ethernet RSI with OfficeLite - "Object ETHERNET1 returns error RSIBad"” to “[SOLUTION INSIDE] Ethernet RSI with OfficeLite - "Object ETHERNET1 returns error RSIBad"”.