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Drag is enough of an issue for the ISS that they actually rotate the solar panels to reduce drag when they're not in sunlight, which saves them ~1000kg of propellant per year.

https://en.wikipedia.org/wiki/Night_Glider_mode

If the ISS were built like a scaled-up satellite, you'd be right. But as you say,

> ISS has a lot more empty (well, air-filled) space

and this dominates.

It does have a lot of empty space. But I would presume it also has a lot of heavy metal structure to keep that space pressurized to a human-breathable pressure and allow entry and exit. Satellites don't need to keep much under pressure except maybe their maneuvering fuel in a small perfectly-shaped container with a single small hole.

The ISS has a lot of doohickeys hanging off it, so the cross section is going to be much larger than if the ISS was condensed into a sphere or cube. The ISS is also a lot less dense than most satellites, so even if the drag were the same it would have more of an impact

> Wouldn't drag be proportional to the surface area, hence the square of the length scale, whereas orbital energy is proportional to the mass, which is cubic in the length scale.

Are you assuming the ISS has a similar surface-to-volume ratio as other orbiting objects?

The ISS solar panels are quite large