What makes me nervous is when they start making the pointer space non-linear. Is there a risk that you just can't get the cursor to activate a part of the screen because it keeps getting sucked into a nearby control? Or is the pointer space just a reversibly-warped version of the screen space?
The main effect doesn't change pointer movement: Most controls on iPadOS are bigger than they look, because fingers. With no adaptation, the cursor would be hovering over controls when it looks like it's 24px away from them.
To avoid this, controls move toward the cursor when hovered, depending on how far away the cursor is from their centre. On any given frame, if the cursor is within a control's actual bounds, the control will visually overlap the cursor's current position.
The second thing does affect pointer movement: If you quickly swipe in a single direction, and the cursor lands on the edge of a control, effect #1 still happens on the approach, but the element bounces back to its resting location, and the cursor goes with it.
This seems to work well in practice. It doesn't change anything while your finger is moving, it doesn't affect any 'precise' motions, and it can't lead to your swipe landing on a different element.
I had the same reservations as you before trying it out (and it’s a little hard to tell because all I have to rely on is my meat brain’s interpretation), but it feels like the cursor still moves in linear space. It’s just that whilst it’s over a button (or other control) that the cursor disappears and the selection feels glued to the control for the duration it passes over.