Four, if I'm understanding you, it is generally OK to prune back to a bud if no other option presents itself. Is this your question?

The bigger factor is size of main branch in relation to size (diameter) of branchlet being pruned back to. The rule I go by is the one third rule-one should strive to cut back to a branch that is at least one third the size of the main branch it derives from. Your situation is one in which this does not exist, so you just go for it and see how it goes, again, if I'm correctly interpreting your post. Following storm damage on established trees, I've seen cases where there were a good amount of sprouts at the end of branches that had been broken, due to a lag period between the storm event and the time of tree cleanup. Since these looked of good vigor, it seemed wrong to ignore their vitality, even though they may have been nowhere near one third the size of the branch that had been broken. and even in these cases, I've seen total recovery. It just depends on things like overall tree vigor, maybe species, etc.

This is a VERY, VERY, VERY STRANGE thread. What does the speckled green area represent? Are we to assume that the branch is growing up from a trunk at the bottom of the picture or from the speckled green area? Are we to assume that the leaf nodes without leaves represent a dead part of the branch or just somewhere where the leaf is no longer there? Can you tell us what the heck you are trying to find out? Usually, it's pictures that we need more of, but in this case I think it's text we are missing.

I contributed my exactly two cents. I'm afraid that's all the spare change I've got on me for this thread!