Good advice. I had overlooked how overextended that receiver is.
Big problem though, is you will not be reducing your tongue weight much even shortening it; the lever arm against the rear suspension is little altered. You aren’t going to change the very undesirable mis-match of tongue weight and rear suspension stiffness.
Friction control sway bars can be great for “sway” – really tame a wagging trailer at speed or with windage. I have used them. But it won’t correct weight distribution, which really is the OPs problem.
Towing 3k with a unibody, wobbly frame like an XC90 is not easy. To tow 5k, I would insist on at least a ladder-on-rame construction. 3k is the grey zone. Up to 2k, unibody will generally work (motorcycle trailers, garden/utility trailers, small boats (under 20’ power, for example). Beyond that, it’s difficult.
This is my “tow vehicle” now (pic below/bottom). It’s a 1998 Acura SLX (re-badged Isuzu Trooper). True ladder-on-frame construction truck. I bought it to replace a 1998 100 series Land Cruiser in 2010. I expected to drive it ~2 year and get another 100 LC. Loved it and here we are 14 years later…. I lifted it with Old Man Emu 929 rear off road springs, KYB shocks all around. It can tow 5k pounds w/o issue, only needs a w/d hitch if going far at highway speeds. An XC90, any year, any model, just cannot handle that on the weak unibody frame.
I am NOT saying you need a different vehicle. But you need to understand the limits of a unibody vs. ladder-on-frame construction, then design your hitch, weight distribution plan, sway-control plan, etc. around both the two rig and the towed vehicle. It is WAY more complicated than it sounds at first. I lost a LOT of sleep on this issue years ago trying to learn and be safe. One thing I do know – I will never, ever, again attach a heavy trailer (4k or more) to any Jeep vehicle, swb CJ or Grand Cherokee. Totally dangerous.
I have actually spent time thinking about getting rid of this truck and replacing it with an older XC90, as all I have to tow any more is a light MC trailer, utility trailer, or lighter power boat. Any XC90 can do that. I’ve hung on to it instead; I do not dismiss the XC90 as a tow vehicle. But you are on that cusp, especially with all that windage.
I think, very honestly, you should call e-trailer or another expert place like that. Verify if a WD hitch works with your XC90. I honestly cannot figure out why it would not. If so, $220 for that one from HF is small change given your total investment, and safety and comfort.
I have hooked up a WD hitch to a trailer MANY times. It’s intimidating and annoying for about six times. Then you know your rig, points, effort, etc., and it’s EZPZ. Really it is. Do not let the “look” of it intimidate you. I promise. I went through this learning curve 15 years ago and am so glad I pushed through it.
Also, a capable female miniature black and tan Dachshund as a co-pilot is highly desirable (visible in the driver’s window if you blow it up/look closely), but not mandatory.