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As specified today, shadow DOM subtrees only replace contents of a shadow host. Jonas mentioned that we've once talked about enabling to also not render the shadow host itself. A simple use case here would be using shadow DOM subtrees to build more than one row of a table. One way this could be done is by specifying "display:transparent", which informs the rendering that the DOM element it matches is removed from rendering and substituted with its children. The path here would be to specify "display:transparent", then specify shadow host and shadow root rendering in a way where by default, shadow root has "display:transparent" applied, and shadow host does not. Then the authors could simply set shadow host to "display:transparent" and eat their cakes.
This will be done as part of CSS work on display:contents or whatever it's called. No special work needed here.