I'm guessing you're in WA state since you said there is no state tax benefit, plus your user name and the fact that OR and ID both have state 529 tax benefits on contributions.
I contributed to 529s for my three kids, but my situation was different from yours - ID has better tax benefits for 529 contributions, I have three kids, and I expected all three to go to college.
Some thoughts:
If the taxable account is in your daughter's name, then the prior comments about both kiddie tax and the adverse impact on financial aid are considerations to take into account.
If it's in your name, then you'll have taxes along the way and capital gains if you sell to pay college. The capital gains is probably going to be high, since you say you're both educated, so in 18 years you're likely to be in a pretty high capital gains bracket - at least 15% and maybe 20% and possibly even 23.8% (NIIT).
I think you're overestimating those low interest college loans. First, the low interest loans are only for the student, not for the parent, and they are limited in size - I think about $5K or $6K annually. Second, the interest rates may not be low in 17 years. Third, and most importantly, those student loans typically have a significant origination fee of 4% or more. OTOH, the interest paid might be a tax deduction then. I think it still is currently, although there may be limitations. At any rate, I don't think you're going to be getting much interest arbitrage as you are hoping for after all is said and done.
I think you're overestimating the 529 penalty. If your kid gets scholarships (a likelihood), then you only owe income tax, and only on the earnings portion of any nonqualified withdrawal. And NQ withdrawals are reported on the student's return, so if you remove the excess over time while they're in school, they may not even owe any taxes or penalties at all. I've made a variety of non-qualified withdrawals from my kids' 529s over the past several years (I ended up overfunding) totaling in the very low five figures, and so far have paid $0 in taxes and $0 in penalties. Plus I'm able to watch and adjust as my kids' plans change and am aiming for zero or only a bit left when they're done - although if you only have one child this is admittedly harder to do.
Finally, if you're both highly educated, there's a decent chance that your kid will not only go to undergrad but might possibly go to grad school. 529s can be used for grad school as well. Oh, and 529s can be used for private K-12 tuition up to $10K per year, if that's something your kid might do.
Don't forget the AOTC and the LLC, which are useful to coordinate as part of your overall arsenal.