I actually think that’s the best option. Prior to NVL gets messy since he was supposedly sold into service with Liam; and doing errands for Pan (like getting cake??) always struck me as super lame given the powers of NVL
They could technically do prior to Neverland, but it’d have to be before he got his hook, since he literally goes straight to Neverland following that incident. Not unless we want another “Swan Song” on our hands, where they sloppily try to place a new flashback in-between a previous flashback. They could do:
1) Between “Good Form” and “The Crocodile”. When Killian became a pirate after Liam’s death, but before he crossed paths with Rumple.
2) In-between the events of “The Crocodile”. When Killian and Milah were sailing the oceans together. That’s roughly 7 years or so to take into account. Baelfire was probably around 7 when she left, but 14 when Rumple lost him. They would have to get Rachel Shelley back as Milah, which may not be all that difficult. I honestly would be intrigued on exploring that time period. We only saw the beginning and end of their relationship, after all.