Jess,
Is it possible to run your chips through a hot
compost cycle first? The composting process would help relieve some of the concerns of tying up nitrogen. I would strongly suggest not mixing the chips into the soil but placing them at the bottom of the hole much we do with hugelbeds where the wood lies under the mantle of soil. Doing this would reduce the surface area of the chips overall and would likely act more like solid pieces of wood.
I have a similar, extremely dry climate, on my end of the Rockies. I felt good about using chips as my top mulch on all of my hugelbeds last year. I saw some decomposition after one year and fungal hyphae were visible. We had maybe six inches (15 cm) of moisture last year and it's not doing much better here this winter. These chips will break down slowly for sure but they are on their way. Slow and steady often wins the race. Good luck.