“Thus, the greatest risk is to users who are in encrypted rooms containing malicious servers.”
Element, FluffyChat, Nheko, Cinny and SchildiChat could be tricked into handing message keys to an impersonated device. The protocol was fine. The clients were not. In a federated network, anyone can run a homeserver, including the one you are worried about. End-to-end encryption is only as good as the worst client in the room.