If I remember right I read somewhere that Touch Bar is connected via USB internally.
That doesn't mean it is using the full bandwidth of USB. If you can browse the web and listen to music over bluetooth I don't see why a touch bar shouldn't work.
Alternative TB3 monitors will probably be available from other manufacturers soon. BUT they may not have the proprietary internal circuitry from Apple that enables 5k via SST, and bi-directional user-controls etc.
Is the LG display using 5k over SST? Don't think so: my understanding was that 5k over TB3 used both of TB3s DisplayPort 1.2 channels much like Dell's 5k display used two DisplayPort cables. The limitation being that neither TB3 nor the Intel Skylake GPUs support DisplayPort 1.3. AFAIK the 5k-over-SST thing is a proprietary internal connection buried inside the iMac.
Also, there are
VESA standards for controlling brightness/contrast etc. from the computer.
I'm hoping it also means DisplayPort daisychaining will work with it, (daisychaining only works with Apple's own Thunderbolt displays) but I'm not optimisitic.
You can't daisychain 5k displays - 1 x 5k uses up both DisplayPort 1.2 channels on a TB connection and even a hypothetical DisplayPort-1.3-over-USB-C link needs all 4 of USB-C's high-speed pairs for 5k.
...and on a USB-C monitor, like the LG 4k one, I don't think you can daisychain 4k displays @ 60Hz with DisplayPort 1.2.
So why not just reduce the price of an Apple-branded and designed monitor produced by LG instead of trying to wallet rape the consumer?
I can't shake off the impression that these LG monitors started off that way, but that the project was axed. Look at the choice and placement of connectors - no DisplayPort or HDMI inputs as you find on most 3rd-party displays, no USB-A out (USB-C is the future, stay on message!) and look where they are placed. Look at the "hump" on the back (remind you of the iMac/TBD, but without the curves, at all?) The odd "forehead" (I've now realised, that's where the webcam is) - goes away if you stick a continuous sheet of glass over the front. To me, this has all the hallmarks of an Apple-designed display
sans the high-end machine aluminium casing.
Meanwhile, here's LG's own idea of what a USB-C display looks like:
http://www.lg.com/us/monitors/lg-27UD88-W-4k-uhd-led-monitor
Apple's reasoning is this: You don't need to connect your laptop to a monitor when its content is likely synced to the cloud. They expect you to use an iMac when you're not traveling.
...and that's Apple's problem: second-guessing how people should use their computers and risking driving anybody who differs away from the platform. OK, Jobs did that
a lot but he was rather good at getting it right (he didn't always) and actually understood the PC industry. Thing is, Microsoft can decide that they're going to throw everything at a couple of niches: laptop/tablet convertibles and $3k artist's easels, but if that doesn't float your boat you can walk away, buy a brick-thick desktop-replacement laptop or build a desktop system from components
and stay on the Windows platform. The danger for Apple is that they'll laser-focus on the short-term profitable business of executive ultra-thin laptops but, without diversity in the user base, the platform will stagnate in the long term.