Qdeathstar:
This accomplishes that goal 100 percent of the time
That's true
Qdeathstar:
(fail safe)
But that's not that same as that. It's like designing a "fail safe" elevator which you can stop from dropping when something went wrong by manually flipping a switch/pulling a lever. That's not fail safe.
Qdeathstar:
Committing to low voltage switches for house wiring is a terrible idea as a practical matter. They did that in he 1950s and I'm having to take all those wires out and replace them with the right stuff.
Can you tell me what's wrong with it except from not being standard?
Qdeathstar:
The other problem with the low voltage relay is that t precludes dimming the lights.
If you use a relay then kind of. You can still use a fixed or series dimmer. But it has nothing to do with low voltage switches.
Qdeathstar:
If your selling the house for examle
That is a good point. But with all the home automation is becomes a different world. And routing it via a relay also leaves you with some work to remove it when you sell. You can't really leave the relay...
dave-in-nj:
are you in politics ?
Nope, electrical engineering, kind of the same thing 
dave-in-nj:
using one relay and multiple manual switches offers one safety factor. you can unplug the controls and it fails in a steady state. then any switch will toggle to the other state.
There you have a point but you have to first bypass the system by turning the Arduino off. But my point is, you cannot call that fail safe.
But if you want to be able to bypass it like that then yes, go with the multi way switches. But I wouldn't install all the extra wiring and spend all the extra money if I had to start from scratch just for that small benefit. It's just about some lights after all.
Like I said, the main light switch in my livingroom is low voltage and the light and AV devices are controlled via triacs. Yeah, I had to fix one or two bugs when I had it installed (one was a random disco...). And yeah, I blow a Triac because I didn't designed it for a TV, radio, sub woofer, Playstation 4, Xbox One, Game Cube, Wii, Nintendo 64 and chargers on that one triac. (But at least that fails short circuit so fail safe in this case.) But after that beta time it's running smooth for 3 years 24/7, no problem.
dave-in-nj:
you are in a fly by wire plane, expecting that a failure of any part of your system means a total loss of control.
in the other proposed system, you shut off the power, lose electronic control and manually regain full manual control
With fly by wire, that's not going to happen. Shut off the power = shutting down control. Yes, you're able to bypass sub-systems (or it happens automatic aka fail safe) but in the end it all depends on the basic system. If the basic fly by wire controller fails you're indeed doomed. That's why there are multiple redundant systems which can disengage each other in case of a error. If they do it themselves it's fail safe. If the pilot has to do it it's just another bypass.
dave-in-nj:
As a note, do you know the difference between a lighting contactor and a relay ?
Think transistor, FET, triac, SCR, it is all the same right ? just random fancy marketing terms ?
Okay, you have a point. It's a group name. But a group name from marketing.
dave-in-nj:
unfortunately (or fortunately) my job is to replace poor designs and poor equipment choices with things that work in the (get ready ) "application" in which they will be used. does not make me an engineer, just a pragmatist.
And that's because
or a management decided the 2 cents cheaper option should be "good enough";
or the engineer(s) didn't got the design requirements right (probably given by the same management);
or the designer calls himself engineer but is not ;D
dave-in-nj:
is ANY electrical thing fail safe ? here is one definition : A fail-safe device is one that, in the event of a specific type of failure, responds in a way that will cause no harm, or at least a minimum of harm, to other devices
I can agree with that definition 
dave-in-nj:
the single relay, multiple manual switch method proposed will take itself out of service and allow manual operation,
No, it will not. It will just do unwanted (and maybe harmful) stuff until you bypass it. Making it NOT fail safe. But yes, in case of a bypass it's still easy to control the light. But is it worth all the cabling aka money? That's a question you have to answer. I would say no. At least not for domestic lighting.
dave-in-nj:
the fully automatic system proposed will cease all operations, either all on, all off, or the flashing described, with the only option being the nuclear option of pulling the plug and having no way to turn the lights on.
I wouldn't call it a nuclear option but that's true. But I never said you can't add a bypass switch to that. Isn't as convenient as all switches working but it's a hell lot less mains wiring (aka money) to do so.
But my point was, both options are not fail safe. And both options don't mean you can always turn on (or off, whatever you find "safe") the light no matter what. You have to do something (bypass the automation) in order to control it again. So it doesn't mean you know for sure the light will come on when you walk in the door and flip the switch. Yes, doing it the multi way switches way you can make it work again after you bypassed it. But it's not fail safe. And is it worth it?