That's too bad and sounds like you've done all the right things. I would have thought the Kimberley being from AUS, would target the 200-series as the ideal target tow vehicle. They don't have many of the larger "ute" options we have in the states and have only recently gotten the RAM.
I'm having a hard time making out your exact hitch setup. Hope you don't take this the wrong way and it's not so much a critique as hoping this will open up the S3 for other 200-series owners. Looks like there's some parallelogram type drop hitch thing you have that may project the pivot further from the bumper? In my experience towing a 1200lb tongue trailer, inches make big differences here, independent of WD. I shortened my drop hitch projection 2.5" and it made a difference. From some really minor porpoising to none. If I'm not mistaken on what you have there, an adjustable Rhino Drop Hitch, there's probably 8" of extra projection from the rear bumper. This stuff is often discussed on the Airstream forums as even HD trucks are not immune and benefit from seemingly minor details.