I’m a noob on the hardware side of things but is the whole “hardware wallet” thing supposed to be that the hardware is the security not the software? Feels like a lie from the beginning…?

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Correct.

That's why FOSS wins.

Honestly though I recommended ledger to friends and family over the years, I feel totally scammed ☹️

Seems so. Its not isolated in the secure element (which is not open source). It can be exfiltrated and the only thing you need to recover is a govermment ID. Which would mean if the government wants to freeze your assets, they can.