The issue comes down to how the device interacts with your computer. Just like the original version, the new Steam Controller has no native Windows drivers. This means the hardware relies entirely on the Steam app to function properly. If you do not have the game running via Valve’s storefront app, your shiny new gamepad turns into a useless piece of plastic.
Gamers Nexus also reported this and there are a lot of other news outlets also covering this. It is kinda the same as with the steam deck where I noticed that the inputs just don’t work until steam is launched. I really don’t like that I have to have Steam running for this controller to work. I don’t know if it is a dealbreaker for me, yet, but it really put a damper on my enthusiasm about it
You bring up a lot of good points, but something I would to add is that there is a reason why you wouldn’t want it to act like a standard xinput device without steam.
One big usecase for the steam controller is as the primary (and possibly only) input for a HTPC (such as the steam machine). So having the controller act as a basic keyboard and mouse without steam (ie: lizard mode) allows you to navigate menus that a standard controller can’t such as pre-boot Operating System menus or BIOS menus without having to breakout a keyboard and mouse.
As I am understanding it right now it doesn’t work that way though. Its just a plastic brick until Steam is launched. If it DID work that way that would be sick and I really hope I am wrong.