Do you still see an opening for a MitM if you assume TOFU works? There is authentication, just not on first connect. I'd be interested in your view on what I missed.
The exfiltration is of course a concern. Part of the prototype I'm doing, is looking into how much we can protect against this. (See also feedback I left to tillitis regarding access to the assigned secret, <https://github.com/tillitis/tillitis-key1/issues/186>.)
Concerning rotations, absolutely correct. Consider though that any change of program-binary or user-supplied secret or device brings its own secret. Note that because of the lack of persistence on the device, a client would store a data, even if only for use within the device.
Note that the secret is determined at every execution as the program-binary loads. The device, TKey, itself is a general RiscV processing unit with device-firmware that initializes a little bit of device and memory, takes the program sent to the device, then starts executing at the program-binary's entry-point.