I feel like this is a modernized definition of “console”. The earliest consoles distinguished themselves from the computers of the time by being gaming-first, not by being restrictive and closed off. Things that defined a console were not coming with a keyboard or mouse, connecting primarily to a television rather than a monitor, and using a joystick or gamepad for input.
There were a lot of instances of third party published games for consoles in the past, whether officially licensed or unofficial, approved or unapproved. The online service definition ignores half of the console generations in video gaming history. There were a lot of unlicensed/3rd party games published for the 8-bit and 16-bit era consoles (and yes, some of those had to bypass security chips, but I don’t think all of them did).
I think in some ways the Steam Deck is a return to form of these earlier machines, but in a modern way (and handheld). Valve’s openness isn’t a good reason to not consider the Steam Deck a console. I fully agree that it is a PC, but I feel like it fits both definitions in the best way possible.