It's true that the 26-man was the 25-man until recently but it's also true the Phillies needed every one of those eight relievers last year (and then some, with the options and injuries and roster changes). It's just that Song might not actually be worse - or used any more - than the last reliever on the Phillies roster at any given point
Honestly what they should do is just give him a position player's spot. How many times did they really use three bench players (let alone the second catcher) in a given week?
In the end though, I don't think they can hide him or put him in a position for a role he cannot handle, and doing so also makes him less of a prospect.
Regarding Curtis Mead, Sanchez was the talented pitching prospect the Rays decided wasn't worth protecting on the 40 but had value greater than simply losing him in Rule 5. Had Mead needed to go on either the Phillies' 40 or the Rays' 40 that year he probably wouldn't be what he is now. Question is could the Phillies find a Curtis Mead on the Orioles or A's and trade Song for him.
I think this will take care of itself. The coaching staff will know what is possible with him after seeing him in spring training. They can't play games, or give away too many major league outs in 2023 no matter how valuable he might be in 2025.
This is also another situation where Rule 5, which is meant to give players more freedom of movement or force teams to pay them a 40-man salary, really does absolutely nothing for the player in the big picture. The best thing for Song's career would be to say "thank for your service, go back to the Red Sox where you can develop properly." Or the Red Sox could say that and renounce his Rule 5. Neither team is going to do that of course.