Hi @meetbhatt2113 ,
Thank you so much for your interest in our products and for using our community.
Q1: Is this difference expected on the RT1176 due to core ownership, XRDC restrictions, or the way MCUXpresso generates projects for dual-core devices?
A1: I suggest you can refer to IMXRT1170RM chapter3 Memory Maps, especially 3.2 System memory map (CM7) and 3.3 System memory map (CM4).
You can find out that multiple peripherals can run in CM4.

Q2: What is the recommended approach when moving functionality from CM7 to CM4? Should pin multiplexing always be initialized on the CM7 core only, or is it valid for CM4 to configure its own pin multiplexing if clocks and XRDC permissions are set appropriately?
A2: There are many SDK demos for CM4 for you to refer.
Pin multiplexing can be initialized on the CM7 core, but synchronization with the CM4 core must be carefully managed. Alternatively, CM4 can configure its own pin multiplexing if required.
The choice depends on your project requirement.
Q3: Any guidance or best practices from NXP or experienced users would be greatly appreciated.
A3: I suggest you can refer to the following application notes.
https://www.nxp.com/docs/en/application-note/AN13264.pdf
https://www.nxp.com/docs/en/application-note/AN13114.pdf
Wish it helps you.
If you still have question about it, please kindly let me know.
Best Regards
MayLiu