The same seems to be true for the RotationGizmo and the updateGizmoRotationToMatchAttachedMesh attribute.
The described workaround keeps the arrows (and the circles for the RotationGizmo) fixed, but in the case of the RotationGizmo, the pivot point for calculating the rotation still seems to be translated, which makes the combination of a “fixed” PositionGizmo and a RotationGizmo difficult to handle after a translation.
Here’s PG which combines both Gizmos: https://playground.babylonjs.com/#31M2AP#349
The point for calculating the actual rotation seems to be off and it gets worse when translating the object.
I’m afraid to say that I see the same issue with the updateScale attribute. If I assign it directly to RotationGizmo or PositionGizmo (same for ScaleGizmo I suppose), it’s not effective. Assigning it to the individual x/y/zGizmos works as expected.