Is the complexity of "invent[ing] its own logic to keep up to date with changing pod configurations" really that substantial?

Each Service maps to an Endpoints set, which is a list of pod IP:port tuples. Seems straightforward to watch Services, and update your mesh targets when something changes.

Obviously not trivial, but not a huge API surface. And the k8s API is architected to make such reimplementation as easy as possible, by composing the kube-proxy from publicly available cluster APIs.

Seems like quite a thin layer of new glue to connect two moderately-well-proven components together.