I guess the real answer would be to find a middle ground and pick my battles where it will cause the least collateral damage... .

BINGO! You've hit the nail on the head. Many books, seminars, etc have been based on that very concept. I don't believe it's just in dealing with BPD, but in all relationships one must choose what one considers the "big stuff." Although there are some far more challenging situations with BPD (there's that pesky little thing called irrationality), I think you'll find that the more solid ones boundaries are on the things that are ones core values, the easier it is to meet opposition with firmness and still remain compassionate.
I'm not saying it's easy, but I'm finding it worth my efforts. I just have to be mindful not to allow all the "little stuff" to become "big stuff" as the overall dysfunction can cloud my vision.