I tried again got it working this time. I turns out that in versions below 12 the way to set up mirroring of only 2 out of 3 displays is: "Press and hold the Option key and drag one display icon onto another display icon to mirror those two displays.". 10 years of using Mac every day and never knew it was possible.

It is pretty buggy though, "Arrangement" tabs stops working and I cannot change relative screen positions anymore, so to get it kinda working I had to set my real and dummy displays to the same lower resolution before dragging one onto the other and then I could set my desired resolution on dummy screen and it got mirrored onto physical screen.