Camera Raw Settings: "Display P3" Color Space. Shouldnt this be Prophoto RGB?

It doesn't need to be anything. It can be whatever you want. The whole point of a color managed workflow is that color spaces don't need to match anything. It frees you up to use whatever color space is best suited for the purpose.

Photoshop opens the image in whatever color space you set in ACR. That's what "preserve embedded profiles" means. The embedded profile will always override the PS working space. This is how modern color management is intended to work.

Especially among Lightroom users there is a misunderstanding that you need to set everything to ProPhoto. That's probably because ProPhoto is the default setting - but IMO it's not a good default. Default settings should always be safe settings for beginners. Advanced users know what they want and how to get it anyway.

ProPhoto is quite risky, and in the hands of inexperienced users it can increase the risk of uncontrollable gamut clipping and artifacts, and a poor final result. These things are often easier to control earlier in the process. I think the default should be sRGB as a safe setting, and then you can change it to whatever you want.

Display P3 and Image P3 are identical. P3 is originally a cinema standard for digital projectors, with no particular relevance for display technology and still photography. It's basically a variety of Adobe RGB with slightly shifted primaries, and an irregular sRGB tone curve instead of Adobe RGBs regular gamma curve.