RealQM vs EPR Paradox and Bell's Inequality

The Einstein-Podolsky-Rosen EPR paradox was constructed in 1935 to show that Standard Quantum Mechanics StdQM in its statistical Copenhagen Interpretation CI of Bohr-Born-Heisenberg, cannot give a complete description of reality and so that there must be a deeper deterministic theory with variables hidden to CI describing the reality of the microscopics of atoms and molecules. In short that StdQM/CI is incomplete. 

This was meant to be death blow to CI rooted in Einstein's deep conviction that God does not play dice. But Bohr was not impressed and Einstein was finally eliminated from QM as an old fool and EPR felt into oblivion. 

In 1964 EPR was brought back to the discussion about the foundations of CI by John Bell proving a mathematical result named Bell's Theorem stating that the physics of any theory built on a certain set of physical assumptions 1-3, must satisfy Bell's Inequality, which in principle can be tested experimentally. The assumptions are: 

1. Realism: The theory describes a unique existing reality independent of observation by any observer.
2. Locality: Effects are not propagated infinitely fast.
3. Free Observer: Settings of measurement apparatus not pre-determined.     

Here 1 includes the same form of determinism (and observer independence) as in classical physics and 2 also has a classical meaning. Only 3 brings in a non-classical concept by referring to measurement by some form of observer. Bell's results were by physicists first viewed as pure philosophy, but were quicklyly given a form of concrete meaning, when John Clauser as observer in 1964 made a measurement showing violation of Bell's Inequality, which was welcomed as evidence that 

• There is no theory describing reality which satisfies all of 1-3.   

This served as a final blow to EPR asking for a theory satisfying 1 and 2 thus gave renewed support to the canon of StdQM/CI with thanks to Clauser given as a Nobel Prize in Physics in 2022 (why did it take so long?). But the conclusion to dismiss Einstein now as a dead fool was maybe too quick, since EPR did not really ask for 3. 

Recall that Bohmian mechanics can be viewed to satisfy 1 and 3 but not 2, and that the Many-Worlds Theory of Everett like CI can be viewed to satisfy 2 and 3 but not 1. 

It is natural to ask if there is any theory in the spirit of Einstein-Podolsky-Rosen, which satisfies 1 and 2 without involving 3 and so cannot be dismissed by Clauser's experiment. A quantum theory different form StdQM (which Einstein probably like Schrödinger would have welcomed, if available). 

Yes, you are right: RealQM is a theory which satisfies 1 and 2 and does not require 3, where the variable hidden to CI is the free boundary of RealQM as a new element to the picture. 

Concerning 3, note that it is not necessary to make a distinction between an experiment and any other physical process, and so include the experimental apparatus in a RealQM simulation while keeping out the observer.