Looks like it’s Christmas: I no longer have the weird flashing keyboard on Safari. Before, the keyboard behaved weirdly depending on the colour of the background, now it looks normal.
It seems we have what I “predicted” (expected is probably a better word, I don’t want it to sound like it was my invention): They over-do it on first version, and then over time dial it back to something that actually looks nice. I have now disabled Reduced transparency in Accessibility again, although I did set the Glass to lower transparency in the Screen settings (which is not the same effect!)