I could shim out the walls, but the 1/2" Durock will be sticking out past the drywall.
Yeah, that's always an issue. Sometimes you can just fur out the whole wall. And/or use 5/8" sheetrock. Otherwise, the tile should extend beyond the wet area, with a tub leg going down to the floor. So depending on how much the two surfaces are out of plane, you might need a quarter round tile to terminate against the drywall, or a border of thicker bullnose tile.
For the back wall, and one of the short walls, planing the studs to recess the tub is absolutely an option. You'd want the edge of the stud to be in plane with the face of the tub flange. But if the other short wall is preexisting, that will mean shimming that wall even more. The allowable notch in a bearing stud is 25%, so planing them 1/4" or 3/8" would be no problem.
Is method to drop cement board to within 1/4" of tub surface, caulk gap, two coats of RedGard on cement board, drop first row of tile down to 1/8" of tub surface and caulk second gap between tile and tub? Tub going in is Kohler Bellwether K-837-0.
Yes, with the understanding that the cement board laps over the tub flange, so that's to within 1/4" of the horizontal tub deck. And use of a wet film gauge when applying RedGard is recommended.
[If you're not fixed on Durock, you might consider something like Johns Mansville Goboard, or Kerdiboard, instead. Being foam boards, you could fairly easily rabbet the bottom edge to sit over the bathtub tile flange. Whatever you use, read and follow the manufacturer's directions. Unfortunately, the Durock directions I found did not address how to handle a bathtub tile flange. Nor did the RedGard directions I found.]
Sold house we're living in now, and bathroom in purchased house is nowhere near finished. Have five weeks to sort this out before closing.
Have you checked with the buyers to see if their schedule is flexible, and whether they'd be willing to rent back to you for 2-4 weeks? (Or postpone closing, but I assume a rent back would be generally be preferable to both parties.)
Cheers, Wayne