I just tried with my fork on a Rpi5 to create a Rpi3 image.
The warnings in creating the chroot image (your step 5) can be ignored.
xpad and usbmount fail with an error but these can be re-installed on the real Pi3 if needed.
When the final image creation (your step 6) fails with something like
device-mapper: reload ioctl on loop0p2 (254:1) failed: Invalid argument
create/reload failed on loop0p2
just run it again.