Update:

After going round and round, I decided to go with a negative dollar amount product to handle the discount. Appears to be working!

Here's how I did it:

Created a "Discount" vocabulary with 2 terms: "Qualifies for Discount" and "Discount Product." Attached first term to products that trigger a quantity discount. Attached second term to a new Product Type I created with a negative dollar amount price.

- Rule Event: 'After adding product to the cart'
- Condition: 'Total product with term quantity comparison' which checks for "Qualifies for Discount" term against the trigger quantity
- Action: add the Discount Product sku to the cart
- Action: 'set a data value' of quantity 1 (to make sure there's only every 1 max in cart)

Next, we need a Rule to remove the discount product when the qualifying products are removed:

- Rule Event: 'After removing product from cart'
- Condition: 'Total product with term quantity comparison' when "Qualifies for Discount" term is less than trigger quantity
- Action: Loop
- Rules Component Condition: 'Line item has term' ("Discount Product")
-Action: 'Remove item from list'
-Action: 'Save entity'

Also had to replace the editable quantity text field in the cart with the non-editable one.

Bulletproof? Don't know. But Randy Fay's Rules + Components video tutorial helped a lot.