First-yes you can drill with a 70% VA rating. You are not breaking the law. The VA has a system in place where you can waive your VA compensation for the two days of drill a month to receive your drill pay. (An alternative that few choose is to waive drill pay and receive VA pay for those two days.)
Second-you may feel that you are unfit for duty, but it is the military's determination through the PDES that is the sole determination of being unfit. As you proceed through the med board process, they may come to the conclusion that your diagnosis does indeed make you unfit for duty, and medically discharge or retire you. If your injuries/illness cause you to be unfit, they were probably unfitting on your discharge from the military. At that time a med board may have been appropriate and not performed for any number of reasons. The up side is that since the injuries/illness likely occured on active duty, if you were to be found unfit now and rate out above 30%, you rate a military disability retirement with lifetime benefits. If that is the case, it is even possible to make retirement retroactive to your discharge date. Very difficult, but...You NEED professional legal advice now. Your state's medical review system will not likely catch this or process this appropriately.
It is also possible that a board could find you fit for duty. Don't laugh. And that won't change your VA rating. It is independent. I drilled and pulled tours for 7 years with a 60% VA rating. Until the PEB says you're unfit for duty, you are fit for duty, and entitled (and required) to fulfill your duties, within the limits of any profile you may have. You simply cannot get paid both paychecks every day.
But to address your post script-the Army is now required to rate you under the VA rules (and not add their own exceptions as they were doing) ONLY on those conditions that cause you to be unfit. Some of the new changes affect Sleep Apnea, PTSD, and TBI, among others. What matters most here is what the MEB narrative and your commander's letter say.They should support what your ultimate goal is. Get some personal advice from an attorney, a rep from your favorite VSO, or on rare occasion (don't hold your breath) from the nearest PEBLO's office. That is probably Fort Lewis.
Pay close attention to the advice on the previous post about the admin discharges. It happens more often than we would like.
Good luck!