So our situation while probably not quite as "messy" is pretty similar and worked out for us -- so I think its worth applying.
My wife (Chilean) back when she was 18 or so overstayed a few weeks in the US while visiting family -- because at the time didn't understand well the i-94 stamp (she thought she had 6 months with her B2 visa, and was only given 3 months at the time of entry). She applied for another B2 visa afterwards, was initially denied for the overstay...applied again a year later and was approved for 10 years. Many years later we got married, we went through the K-1 visa process, got her green card, lived in the US for a couple years, and then due to health problems of her dad we moved to Chile (been here 4 years). She also gave up her green card (form I-407) after we moved.
When we wanted to visit the US with our family she was unable to use the ESTA (like you said its pretty much an automatic rejection if you have an overstay, and she also had been denied a visa at one-point). But she applied for a new B-2 visa, and was approved without many questions. Also one extra layer of complication we had was that she was applying for a B-2 visa during COVID, the Santiago office was closed to B-2 interviews....so we contacted other embassies in neighboring countries, and she eventually interviewed in the La Paz, Bolivia embassy, and like I said she was approved for her 10 year B-2.
All this to say that she had a bit of a messy situation as well, but overall she could show a history of trying to do things the right way (previous GC holder, several trips to the US and back as a visitor, gave up her green card when she moved) even if she had made a mistake a long time ago -- which is similar to your case. She had I would say medium-strong ties to Chile (car, apartment rental, job), and she is married to a US citizen (which actually works against you for a B-2 visa).
Good luck!