>I've always assumed honeypots were meant to look like regular, yet
>poorly-secured, assets.

Not at all. Most servers have zero reason to have any Bitcoin's accessible via them, so the presence of BTC privkeys is a gigantic red flag that they are part of a honeypot.

I was talking about the traditional concept. From Wikipedia: "Generally, a honeypot consists of data (for example, in a network site) that appears to be a legitimate part of the site but is actually isolated and monitored, and that seems to contain information or a resource of value to attackers, which are then blocked."

I would argue there are ways to make it look like it is not a honeypot (plenty of bitcoin services have had their hot wallets hacked before, and if the intruder only gains access to one server they wouldn't know that all the servers have the same honeypot on them). But I was just confirming that the proposal is for an obvious honeypot.

Re-read my last section on the "scorched earth" disincentive to doublespend the intruder.

The first time I read it I didn't realize that the second transaction the intruder has is designed to waste the honeypot AND additional funds belonging to the honeypot creator. That's pretty good, from a game theory perspective.