If you want to get back into developing software professionally, you should. The tradeoffs seem small. Lower likelihood of product leadership role (that you don't seem that interested in). Higher probability of being a CTO (though I wonder why you want to be a CTO). Your product skills atrophy while you're doing development, but can be redeveloped if you switch back. Compensation is probably around the same (depending on the details of your current roles and prospects, and the developer-oriented role and prospects). More capability of developing the SaaS you want to build yourself.

Joy is worth optimizing for.

Would you lose the joy if you code professionally? Some do, some don't.

> I want to transition back to Software development by going into a developer advocate role so that I can leverage all my client-facing experience and code on a daily basis.

Developer relations makes sense. Another possible stepping stone is Consultant Software Engineer / Solutions Architect (the professional services kind, meaning a client facing engineer that integrates the thing with clients of your company, or builds a full custom solution for them - companies like Thoughtworks or Palantir come to mind).

> I am hoping that this will allow me to build a micro SaaS in the next few years to set up a parallel income stream or become a CTO with a strong product & strategy mindset in a few years.

You seem to have all the skills you need to build a micro SaaS (or regular SaaS - maybe even a macro SaaS). If that's what you want to do, what stops you from doing that right now?

> I am probably going to lose the option to be a product executive in the future

You won't lose the option entirely, especially at smaller companies. Though yes, it will be harder, especially at larger companies, if you change towards development part or full time.