Yes, but it's also a harder problem, aiming to reuse everything instead of just the first stage.

And they have at least reached orbital velocity on several occasions, so they could have physically orbited. They just purposely chose a trajectory that wasn't an actual orbit.

Agreed. And even if they don't ever fully reuse the second stage, they still could use this gigantic working rocket as a (probably still) very cost effective to transport things into space.