I am unable to use the mesh as a root
as the mesh rotates, which messes with
the movement as some of the BP uses
local direction converted to world
space to decide its velocity.
Understood.
However, I tried it with a box
collision[…]
Was going to suggest that but nah 
Also keeping simulation on would not
work, as editing the velocity manually
to ensure it curls in the air and
return to the player will not work
with simulate physics enabled. Unless
I’m misunderstanding, from what I’m
aware manually editing movement of an
object is not compatible with simulate
physics.
Keeping it off and only switching it on on hit might work here, I think.
That being said, if the projectile
come in at an odd angle, or gets stuck
in a corner, the sphere trace produces
no hit result, going straight through
the object.
Not sure what’s happening here - trace starts inside a colliding volume? Perhaps you could continuously sphere trace along the forward vector of the moving object (with the radius close to the boomerang size) and monitor the distance between the mesh and the trace hit. Once the dist is close to 0, you’ve hit the obstacle.
So rather than waiting for the collision to happen, you know how close you are to it happening.