There is a camera pointed at the driver, at least in the model 3, near the rear view mirror. I believe it was indeed installed to monitor the driver.

Both the 3 and the Y, and it actively monitors your attention while Autopilot is engaged starting with Tesla software rev 2021.36.

Looking down at a phone, for example, causes Autopilot to alert, and three alerts in succession reduces your safety score and kicks you out of Autopilot [1] until you go through a Drive->Park->Drive shift cycle.

[1] https://www.tesla.com/support/safety-score (Control-F "Forced autopilot Disengagement")

Oh goodie. I have a Model Y and it literally always goes insane with forward collision warnings in the parking lot for my local grocery store. I guess I'll have to pay more in insurance eventually because tesla thinks I am going to run into a parked car off to the side of me while doing 7 mph.

While Tesla Insurance has potential, I'd don't recommend it at this time.

“Have become inattentive” is doing a lot of work in that description. It means “you fail to respond to the prompt to touch the wheel”.

I’ve gotten double digit red-text autopilot nags (the new ones driven based on camera data) on a single drive, but have never had a Forced AP Disengagement or been put in AP jail.

Wait, Autopilot, or FSD? Or both?

Or "texting while driving" behavior.