Does key auth protect you from a MITM on the first connection?
That is, key auth as reasonable people use it, as you said.
And this:
> but it's really only useful for people that ignore basic security features anyway. (Key auth)
is precisely the point: that's a lot of people. SSH doesn't work for those people. We can play the blame game, but at the end of the day, clearly something is "not right".
And these are people who use SSH to begin with. Not typically technologically illiterate, I would guess. If they can't even be arsed to use "basic security features", what good is this system, then?
Again: there is a way to use SSH properly, yes. But rare is the person who does this.
(But key auth is orthogonal to host fingerprinting anyway, this is kind of a red herring)