One question here is whether we should trust that Android 12+ has a proven 100% reliable method of showing the camera/microphone notification dot when these devices are being used.

I wonder if Google's end game is for manufacturers to hardwire a power LED to the microphone and camera, as this would be close to a perfect system of notifying users they are being recorded, although there will always be a handful of reasons to oppose this and a handful of people adamant a hardwired power LED can still be bypassed without physical access to a device.

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While annoying, you could just assume the pixels between the bezel and punch hole will almost never be useful and just put a thin, long tape piece over the entire edge. (The case would then conveniently keep it in place, where it can be temporarily flipped up.)

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For the extreme privacy minded (e.g. a Richard Stallmann level of, uhh, prudence) you could probably pop out the modules holding the microphone and camera and then exclusively use a USB-C microphone/headset/webcam. Then usability comes down to whether the OS would continue to start with one of these peripherals missing, although in our experience with FP2 and 3, some of the microphones would sometimes fail with no other side effects. I imagine a missing camera would probably just crash the Camera app and any other you've given camera permission to.

Fwiw, I used an EFF sticker on my old Note 2 front camera. The bezel nicely fit the sticker and it had some glue that let itself be removed and reapplied at least a dozen times. Not a perfect solution, but worked. I miss the sticker regularly, even after six years of having a phone without webcam sticker.