Unfortunately chronyd doesn't appear to like that setting. Upon reboot it complained that dropping root privileges was not supported. I rebuilt again without it but now appear to be encountering other problems, more related to BBB and debian I think. Seems like I can't seem to predict very well what device gets assigned for PPS and why. When I started the setup process the PPS was going to /dev/pps0 as I would expect. Then after my last reboot it was getting assigned /dev/pps1 and it appears that device isn't ready at the time chronyd is started by systemd so it has to be started up manually using systemctl which is a no-go for my application. I posted to the BeagleBone google group to see if anyone has ideas as to why. I'm relatively sure it has to do with the startup order from systemd but I'm not expert enough to know how to remedy it.
I want to thank you again for all of the help you've been providing (and the patience). There are sooooo many deep technical details to all of this that it's hard to come up to speed.