you’re right on all accounts.
It’s a miner activated soft fork, tightening rules not loosening them, so it isn’t a hard fork. There might be risk of a chain split, but without any hash on the BIP-110 chain it effectively would be a neutered chain since the difficulty would be insurmountable. A minority faction of nodes signaling with knots/BIP-110 isnt going to be a hard fork of anything, it’s just to show the miners (and really the exchanges) where users want the future to be: Bitcoin as money, or Bitcoin as… something else, anything goes, Ethereum 2.0
But there certainly is a lot of FUD running around out there.