using bind mounts in UT works on my FP4/OTA-1 (focal) without touching any permission settings etc as described in the waydroid documentation:
https://docs.waydro.id/faq/setting-up-a-shared-folder
for example:
sudo mount --bind ~/Documents ~/.local/share/waydroid/data/media/0/Documents
sudo mount --bind ~/Downloads ~/.local/share/waydroid/data/media/0/Download
sudo mount --bind ~/Music ~/.local/share/waydroid/data/media/0/Music
sudo mount --bind ~/Pictures ~/.local/share/waydroid/data/media/0/Pictures
sudo mount --bind ~/Videos ~/.local/share/waydroid/data/media/0/Movies
allows sharing files in those directories between UT and waydroid both ways.
The one missing feature is making the bind mounts permanent. I added them to /etc/fstab but changes to that file don't seem to survive a reboot.
edit: I realize you did link to this and mentioned it doesn't work on xenial, I still posted here to let people know it can work on focal