No. If the Bind with updateDN was successful this error will never appear.
It certainly appears that binding with the updateDN was successful from the logs -- could it be because I am using the rootDN as the updateDN?
However, one would still need a chain directive in the last consumer, which I don't think I saw. It should then update the provider, not the "pivot" - unless the "pivot" were also configured to chain to the original provider.
Incidentally, I should probably mention that this is debian etch's OpenLDAP 2.3.30 (but there is no possibility of changing this, unfortunately).
Cheers, --alex