[guided]The point of inserting $\chi(\varepsilon\xi)$ is not merely to make the product smooth at $\xi=0$. It also gives a small factor in lower-order symbol seminorms, because the support of the cutoff moves to larger and larger $|\xi|$ as $\varepsilon$ decreases.
Fix $K \subset U$, multi-indices $\alpha,\beta$, and an integer $\ell \ge 0$. We want to estimate $b_{j,\varepsilon}$ in the seminorm of order $m-\ell$, namely
\begin{align*}
p_{K,\alpha,\beta}^{m-\ell}(b_{j,\varepsilon}) = \sup_{(x,\xi) \in K \times \mathbb{R}^n} (1+|\xi|)^{-m+\ell+|\beta|}|\partial_x^\alpha\partial_\xi^\beta b_{j,\varepsilon}(x,\xi)|.
\end{align*}
Apply the Leibniz rule to $\partial_\xi^\beta(\chi(\varepsilon\xi)a_{m-j})$. Each summand has the form
\begin{align*}
\varepsilon^{|\gamma|}(\partial^\gamma\chi)(\varepsilon\xi)\partial_x^\alpha\partial_\xi^{\beta-\gamma}a_{m-j}(x,\xi)
\end{align*}
for some multi-index $\gamma \le \beta$. The factor $\varepsilon^{|\gamma|}$ comes from differentiating $\chi(\varepsilon\xi)$ exactly $|\gamma|$ times.
Now we use the support information. If $\gamma=0$, the factor $\chi(\varepsilon\xi)$ can be nonzero only where $|\xi| \ge \varepsilon^{-1}$. If $\gamma \ne 0$, the derivative $\partial^\gamma\chi$ is supported in the transition annulus $1 \le |\eta| \le 2$ in the variable $\eta=\varepsilon\xi$, so the term can be nonzero only where $\varepsilon^{-1} \le |\xi| \le 2\varepsilon^{-1}$. Thus every nonzero summand lies in the region $|\xi| \ge \varepsilon^{-1}$.
The derivative $\partial_x^\alpha\partial_\xi^{\beta-\gamma}a_{m-j}$ is homogeneous of degree $m-j-|\beta|+|\gamma|$ in $\xi$. Since its restriction to $K \times S^{n-1}$ is bounded, there is a constant $C>0$ such that
\begin{align*}
|\partial_x^\alpha\partial_\xi^{\beta-\gamma}a_{m-j}(x,\xi)| \le C|\xi|^{m-j-|\beta|+|\gamma|}
\end{align*}
for all $x \in K$ and all $\xi \ne 0$.
Multiplying by the weight in the seminorm, the corresponding summand is bounded by a constant multiple of
\begin{align*}
(1+|\xi|)^{-m+\ell+|\beta|}\varepsilon^{|\gamma|}|\xi|^{m-j-|\beta|+|\gamma|}.
\end{align*}
Because the summand is supported where $|\xi| \ge \varepsilon^{-1} \ge 1$, the factor $(1+|\xi|)$ is comparable to $|\xi|$ with constants independent of $\varepsilon$. Hence the last display is bounded by a constant multiple of
\begin{align*}
\varepsilon^{|\gamma|}|\xi|^{\ell-j+|\gamma|}.
\end{align*}
Now we must use the correct support information for the sign of the exponent. If $\gamma=0$, then the exponent is $\ell-j \le 0$, and the lower bound $|\xi| \ge \varepsilon^{-1}$ gives
\begin{align*}
|\xi|^{\ell-j} \le \varepsilon^{j-\ell}.
\end{align*}
If $\gamma \ne 0$, then the derivative of the cutoff is supported in the annulus $\varepsilon^{-1} \le |\xi| \le 2\varepsilon^{-1}$. When $\ell-j+|\gamma| \ge 0$, the upper bound in this annulus gives
\begin{align*}
\varepsilon^{|\gamma|}|\xi|^{\ell-j+|\gamma|} \le 2^{\ell-j+|\gamma|}\varepsilon^{|\gamma|}(\varepsilon^{-1})^{\ell-j+|\gamma|} = 2^{\ell-j+|\gamma|}\varepsilon^{j-\ell}.
\end{align*}
When $\ell-j+|\gamma| < 0$, the lower bound $|\xi| \ge \varepsilon^{-1}$ gives the same power $\varepsilon^{j-\ell}$. Thus every Leibniz summand is bounded by a constant multiple of $\varepsilon^{j-\ell}$. The final constant $C_{j,K,\alpha,\beta,\ell}$ absorbs the finite Leibniz coefficients, the relevant suprema of derivatives of $\chi$, the homogeneous derivative constants on $K \times S^{n-1}$, and the comparability constants between $1+|\xi|$ and $|\xi|$. Therefore
\begin{align*}
p_{K,\alpha,\beta}^{m-\ell}(b_{j,\varepsilon}) \le C_{j,K,\alpha,\beta,\ell}\varepsilon^{j-\ell}.
\end{align*}
This is the key estimate: for every fixed lower-order seminorm, the $j$th term can be made arbitrarily small by choosing $\varepsilon$ sufficiently small, provided $j$ is beyond the order threshold $\ell$.[/guided]