I think there's a misunderstanding here - I was sloppily conflating together MITM (a malicious server admin who has created a false device eclipsing a real one, who forwards traffic onto the real one, having reencrypted it) and a "ghost device" (a malicious party who has added a new device to your account which is sniffing your messages).
My point was that to mitigate both attacks, it's vital to verify key identity out of band. I agree MITM is much less likely than passive listening via a ghost device: we haven't seen MITM in the field, but we have seen attackers try to add ghost devices to spy on accounts (by acquiring a login password, adding a new device, and hoping the victim doesn't notice they've sprouted a new E2E device and that nobody verifies devices).
My point was that to mitigate both attacks, it's vital to verify key identity out of band. I agree MITM is much less likely than passive listening via a ghost device: we haven't seen MITM in the field, but we have seen attackers try to add ghost devices to spy on accounts (by acquiring a login password, adding a new device, and hoping the victim doesn't notice they've sprouted a new E2E device and that nobody verifies devices).