Without rfc3768 mode, the arp caches of other systems need to change to pickup the new ip->mac mapping. RFC3768 mode solves that, but there is a bug for which I have a patch.
while from some system in 172.16.5.0/24, run “ping $target”. You should see the icmp packets incoming on eth1 and outgoing on eth0 on the master. Do a vrrp transition, and which vyos box sees the incoming pings, and does either box show outgoing pings?
To me it looks like the ARP is updated correctly. When I capture traffic on the interfaces when doing a transition the traffic switches over to the new master. Traffic which are not NATed works fine. The NATed traffic shows up on eth0 but does not go out on eth1.
Can you try http://www.five-ten-sg.com/util/VyOS-livecd-1501130922-69741b0-amd64.iso in rfc3768-compatibility mode? It seems to work for me. I setup two VMs from that iso, brought up an inbound natted connection into a server, and an outbound natted connection from a client, shutdown the master vrrp, and both natted connections survived.