Yeah that's true. I stopped thinking about the Pi Zero W early in the project because I assumed it would choke on video encoding. When I discovered that the HDMI dongle was doing the heavy lifting, I forgot to revisit that assumption. I'm going to order an USB to micro-USB adaptor to test it out because it would slim things down significantly.
>>mtlync+(OP)
Woops, forgot the major issue-- the Pi Zero only has one USB port (the other is just for power), so you couldn't get video frames in at the same time as you pretended to be a keyboard.