Top-Heavy related questions; how does that impact coverage testing? I know that the people who do not work enough hours who would normally not get an allocation end up (usually, I suppose) getting an allocation when the plan is top-heavy, but does that figure into coverage test for 410(B)? Does a two step coverage test take place in this situation?

Some have said that IRS regulation 401(a)(4)-2(b)(4(vi)(D)(3) as well as 1.416-1, Q & A M-10 impact this situation.

top heavy is a non-elective contribution, so anyone who receives top-heavy is considered as benefiting.
what you end up with, for all practical purposes, is a 'class' plan - those at 3% and those at x%.
you could test a(4) on an allocation basis, or even cross test (but watch out for gateway minimum)

as you pointed out, see 1.401(a)(4)-2(b)(4)(vi)(D)(3) and the example #2 following involving top heavy that follows. for all practicallity, it achieves the same results as above. remember, the ees in question are still benefiting, you only treat them as 'not benefiting' temporarily to prove 'nondiscrimination.

I suppose you could think of this type of situation as being a plan that could end up passing the 'broadly available allocation gateway"

by the way, I realize you said "IRS Regulation 401(a)(4)..." if it helps the '1.' in front of the number indicates it is from the regs.
without the '1.' implies it is from the Code.