I don't think you're missing anything. If you are missing something, I'm missing it, too.
I've just used your modified ckeditorconfig.js file in my test site (Showkase-Pro v1.7.6 with latest patch) and the attribute is added to the <iframe> code each time the site is published (and my test YouTube video is displayed in the site).
The one thing I find to be odd is when you say "When I go back to Showkase, remove the sandbox references and re-publish, it does show correctly.".
With the new code in place (at the foot of the ckeditorconfig.js file), each time you publish the site, the editor will add the sandbox="allow-scripts allow-same-origin" attribute to all iframes.
If an iframe has no sandbox attribute, publishing should ensure that it has the sandbox="allow-scripts allow-same-origin" attribute.
If an iframe has a pre-existing sandbox attribute with any value (even empty ""), publishing should ensure that the sandbox attribute changes to "allow-scripts allow-same-origin".
Therefore, every time you publish, (even after removing the sandbox attributes), each and every iframe should have the sandbox="allow-scripts allow-same-origin" attribute and the videos should display.
This seems to be working as expected in my test site.
If I can think of anything that might be causing this process to not work in your own site, I'll be sure to post back.
Edit:
If you are able to remove the sandbox attributes by removing them in the editor and republishing (and they don't reappear with the "allow-scripts allow-same-origin" value), then your editor does not seem to working in the same way that mine does.
Maybe try re-applying the patch to make sure your site is using exactly the same files as mine. (Link in this post.) I've updated the patch a couple of times since it was first released and the latest version includes the new sandbox attribute (in the ckeditorconfig.js file) so, after applying the patch, there are no files to manually edit/update.