Yes. I agree 100% with the things I can and I defer to your experience where I can’t. I used to write proprietary networking protocols 20 years ago and that’s the knowledge and experience I’m leaning on.
As a matter of practice we would ensure to process passwords by encrypting the datasteam directly from the input, and they were never unencrypted in handling, so as to protect against various system and browser vulnerabilities. It would be a big deal to have them accessible in plaintext beyond the user client, not to mention accessible and processable by email generation methods and insecure email protocols.