"Why can't I file a Schedule C for the business owner as if the S-Corp 1099'ed him and report both EE and ER portion or payroll taxes on schedule SE?"

Because this is not the person being a subcontractor to their own entity by running a different entity. In  addition, in the simplest terms, think of your proposal as Worker Misclassification, setting aside the issue of trying to have your own entity treat you as independent.

And the other issue is to understand that the IRS will look at any funds taken from the S Corp (you would call it Draw from the Sched C business), which is Distribution in the S Corp and if not taking a reasonable wage through payroll, and they recharacterize it as Payroll, because an S Corp is required to have payroll for the people it hired to do its business. Then, the IRS will declare you attempted to avoid Payroll taxes, which is punishable as tax avoidance is illegal. So, did you want payroll recharacterization, or just confess to it up front but be late about it?

"In nature the S-Corp did pay the 100% owner as a 1099 contractor, and I think the QBI deduction is appropriate too."

Is there something else you overlooked telling us? It's a subsidiary, the person was paid as an employee through the other corporation, they didn't even do business in 2020 and payroll is timely now for Jan 2021, perhaps there were no operations and only startup? Are you setting a Fiscal Year?

You should review what the IRS requires, including as example:

• The entity and all shareholders reported their income consistent with an S corporation election in effect for the year the election should have been made and all subsequent years; and
• Less than 3 years and 75 days have passed since the effective date of the election (See the Exception to the 3 Years and 75 Day Rule section below).

So far, nothing here is "special."