>the Listener rejects any handshake from an unknown key.

It never responds, there's no indication of rejection.

The client can't even be sure a service is actually there or they've hit a default drop firewall rule.

This is confusing to me, and I'm not a novice to WireGuard.

WireGuard is a layer-3 protocol. Given that WireGuard does not natively support DHCP or dynamic internal IP allocation within its encrypted tunnels, and it instead relies on static tunnel IP configurations (Address and AllowedIPs for each pre-registered client), how would a new unregistered client be assigned an IP address within the encrypted subnet?

I think this would nerf wireguard similarly to how a "null" encryption effectively nerfed IPSec. Fine for a specific use case (debugging comes to mind) but should never be upstreamed imho.

Why stop there? Give use Wireguard certificate auth already!