v2 is not a MitM concern (but it is a malicious code concern). Before quibbling about this consider that if v2 qualifies as a MitM concern then pretty much every other piece of software also does. That isn't in keeping with the spirit of the term.

The outrage is threefold, because there is no viable alternative, because it infantilizes users, trampling their agency, and because it clearly serves corporate interests at the expense of the user.

As to your proposed solution - the rewriting needs to happen on a separate device in order to avoid pushing extra data across the network. If you're already self hosting that service then there's no need for a transparency ledger.