So I just add a new custom toolbar to the bottom of the screen titled "Incognito" so that the text is always there, and suddenly nothing's being recorded anymore? :P

On one level that's convenient, but on the other hand I'm not sure it's a very robust design.

That only works if you have the "New Incognito Tab" page active. Not when you're actually browsing something.

There's also the profile button at the top right, just to the left of the hamburger menu, that says "Incognito" on it.

Yeah I forgot about that.

What if it’s fullscreen? What if the title bar of the window is off the screen?

A better solution would be to just pause the screen capture whenever incognito is open anywhere