As Ramseth had said, from 1963 to 1965 until when S'pore was expelled, there was one country with two PMs, and two Heads of state. I didnt think there was any parallel. By 1963, the left wing had been crippled as most of the leaders were in prison. The raison detre for Mereger was completed. A separate Singapore would not harm security considerations for M'sia and the British could always take it back, which LKY feared, because that was certainly an option. You are quite right that it was then or never, before the Alliance consolidated power and kept LKY on a same distance.
LKY drummed up the arguments for a Malaysian Malaysia, where he said not a Malay M'sia, or Chinese M'sia . Of cos, that rankled the Fed Malays a lot and played on the Chinese chauvinism on both sides. Until LKY, MCA had always represented the Chinese, which the Fed Chinese had already settled to a comfortable diet of economic power whilst leaving the Malays the political power. They were not complaining as they knew that the malays were a majority.
Singapore inside the fed now upset the racial balance and moved the union to 40:40:20. That probably upset and scared the MCA in case they started losing Chinese support in malaysia. Of cos, Tan Siew Sin was LKY's nemesis.
So LKY would over-dramatise things, create bogeys, exaggerate and confuse people, and with his charisma and command of English and Malay at that time, he really seemed unstoppable to tengku.
maybe lau lee thought it's now or never, his best and only political opportunity in Malaya has to be those early days.
I thought the same too after reading about that history, why was lky so impatient and headed for a "showdown" with UNMO immediately instead of bidding his time?