Looking at your last photo, the plant sure looks to be very root-bound; you might have to stomp on the sides of that pot to loosen enough to get it out, or maybe even have to cut the pot. Transplanting to a half rain barrel sounds like a good idea but I'm wondering what type of winter weather you get in your area? If you get any cold weather, mulching the ground around the plant will help protect the roots and you could throw an old blanket over the top during cold nights. Of course you are in zone 10a so I doubt you have the frost and freezes. You can spread and bury the roots, I just wouldn't pile soil too high up the base but rather plant it at the same level it is now.
Like Elaine stated, as the Tree Philo's grow they produce many aerial roots which eventually find their way to the soil line.
