Attached Arma3.cfg from My Documents in all it's barren glory.

Disabling HD4000 from the device manager had no effect. Curiously, though, disabling it makes the Nvidia control panel complain that I don't have an Nvidia GPU attached to the display. I re-enabled HD4000 and disabled the GT635M just in case the names were swapped for some reason, but the results were identical.

So, what exacly happens at that specific point in the loading that could cause a graphics card-switching crash?

Not that it really matters, since disabling the secondary display adapter does nothing.

The main card is a GeForce GT 635M.
Forcing the "high performance Nvidia processor" on from the global settings of the Nvidia control panel had the result of Steam flashing the "Preparing to launch Arma 3" window for a short moment and then just not launching the game, without any error message.

Added -nobenchmark to launch options.
Unfortunately it's still crashing as usual.

PhysX drivers come with the Nvidia graphics drivers (which I have updated to the latest version), don't they? Installed PhysX system software just in case, no change.

The only other DX11 game I've been playing is Civilization V, which has been running flawlessly.

Nope, all files successfully validated, problem still remains.

I'll just upload mine since I'm having the exact same issue. Also included the Arma 3 folder as that's where it creates a file every time it crashes. I ahve Windows 8 64bit.
http://filesmelt.com/dl/A3Alpha.rar

The thing is, pistols are really loud even when suppressed. In a quiet night all of Agia Marina can hear you firing a suppressed P-07.
It's not quite what you see in the movies, but that's just the reality of things.

The head should, in fact, jerk slightly towards the bullet if at all. This has been covered rather extensively with debunking the JFK conspiracy theories.

Either way, flagging the issue's severity as major is ridiculous. This is barely an issue at all.