To more specifically answer you: today you cannot use xdg-open in this manner unless you ship your own xdg-open and have it open an application in your snap. Eg, you ship a small file chooser and an editor and have your xdg-open your file chooser. I realize this probably isn’t an attractive option for you. Of course if this is what you wanted, you wouldn’t need xdg-open at all.
An alternative, today, would be to disable the OpenFolder functionality and provide guidance to your users to open the files themselves outside of your app, at least until snapd/userd provides something better for you. Since strict mode confinement is desirable, I encourage you to consider this option.
If these options are unacceptable, the only option is classic confinement today.