I think the paranoia stems from the HID inserting winflag+r, powershell curl https... which installs keylogging software. It can do that after a 10 minute or so countdown timer so it might not seem immediately obvious, or might seem like part of a auto-update with powershell postinstall.
> As for inserting keystrokes, that will be obvious if it enumerates as a keyboard.
This is true, but this also doesn't need to happen at insertion time. An HID keyboard can show up, say, 3 hours after you plug it in.
I miss grsecurity's patch set so much. It had an option to defeat this (deny all USB device enumeration post-boot, i.e. after the kernel executes init).
Those work by sitting between the real keyboard and the computer, often deliberately designed to appear as an innocuous adapter (say, a USB-A keyboard plugged into a PC's USB-C port or vice versa) or extension cable.
Malicious USB devices are fairly common, and this certainly has the 'right' form factor.
There's a reason 'do not plug in a USB drive you have found in the parking lot' is reiterated in every corp security training.