Joy,
You (unnecessarily) assign lambda as the orientation choice for the algebraic basis used, then sum over lambda_k with the requirement on Nature of a 50-50 statistical choice of +1 and -1. Like many before you, you conflate basis element and coefficient definitions when you talk about beta_x and -beta_x. You may be able to properly represent both possible orientations of quaternion bases by doing this, but when you multiply algebraic elements in one basis by algebraic elements in the opposite orientation basis, you break the rules of quaternion algebra for rather than three non-scalar bases, you now have six. If instead you assign lambda as a coefficient with 50-50 chance of +1 and -1, and maintain a consistent singular basis set, everything works out as you intended it to, and the basis set orientation becomes a free choice made once for the full run. The math works out to the same conclusion for either orientation choice.
This is the essence of Nature's clue to us regarding mathematical (algebraic) physics and physical reality. Orientation is a singular choice made by the physicist and must be consistently maintained throughout, and Nature demands the math had better not care which choice(s) is(are) made. For all those who fret over "extra" dimensions, this is a clue for you also. There are detectable forces with of course singular reaction directions that are mathematically defined as a non-scalar algebraic product of non-scalar items. Orientation is fully in play in this case, yet the result must have a singular reaction direction independent of the orientation choice. Think about the equivalence of rest frame electric field with moving frame magnetic field for the force on a charged particle, as well as the central scalar * non-scalar force on a charge in the presence of and electric field and realize you cannot deal with this mathematically without algebraic structure with more than 4 degrees of freedom. 4D space-time deals with this with the second rank field tensor, yet can't provide the required degrees of freedom to cover gravitation AND charge central forces in the same expression without the additional structure of intrinsic space-time curvature. A 4D space-time, up ranked tensors, intrinsic curvature, Minkowski split signature are all unnecessary if the fundamental basis space is upped to 8 dimensions and its algebra ruling ALL of physics is Octonion. Smell the coffee, wake up and drink it, then re-read my 2012 FQXi essay.
Joy, you have done great work because you realized reality is proximal to the division algebras. You have just extrapolated beyond where you needed with unnecessary basis orientation connections and you really don't need the non-division associative 8D algebra you allude to which shares the used quaternion sub-algebra with the real deal, the non-associative Octonion Algebra.
Rick