The people that are breeding mandarins in captivity aren't housing them in a natural environment (tons of rock and substrate) and they aren't feeding them live copepods all day; although, they do feed them live feed organisms when they are newly hatched because that's what they require. When they wean them off of live feeds at a young age (when they are past metamorphosis), the mandarins are then fed prepared foods which include dead copepods, mysis and pellets. If this didn't work and the mandarins starved to death, then we wouldn't see captive-bred specimens available. While captive-bred mandarins still eat live copepods in any given reef tank, they will still eat prepared foods. There are people having success with this. I'm no expert either, but this is happening in aquaculture right now. Biota aquariums breeds mandarins in captivity. Here is a video they posted last year with some comments about diet.
My comments here aren't meant to say that mandarins are easy and are for everyone: they are not. I'm just letting people know that these animals can be maintained on a non-live feed diet if you can feed them enough times a day. Since we can't feed them all day long like Biota can, we rely on live copepods and other small crustaceans to keep them happy in between prepared diet feedings.
Very happy to see a discussion about this, and all opinions and experiences matter.