I just looked this up and you're right. If you're subject to the expatriate tax then you're automatically disqualified from the exemption. From my reading, it seems like there is a small loophole. You can sell a foreign property if you move back to the U.S. and meet all the other primary residence conditions.

Exactly. And what's even more brilliant is that it entirely depends on the exchange rates at the start and end of the period. So a zero gain (or even a loss) over that period in the UK can still result in US tax owed.