This IS just to prevent keyboard conflicts

To those who are supposing this is to prevent keyboard conflicts, you are exactly right!

Probably 10 years ago or so, a story popped up about someone with one of the RF keyboards of the time, well, their computer started going crazy, they'd have random stuff typed into office, etc. It turned out, yes, they were picking up their neighbors keyboard. At this point, the RF keyboard vendors realized, hey! If the product actually becomes popular, they'll have neighbors interfering quite often. So they put on this synchronizing between the base and keyboard, using 8-bit code. It's just to avoid interference.

Rather than worrying about people getting your data over radio (which bluetooth worries about), I think they thought about this more the way the old portable phone makers did. With the analog portable phones, the phone and base would sync. But, this would just pick out the clearest channel, and set a code so your neighbor's phone base doesn't ring your phone. Your call was still in the clear, it was simply meant to avoid your phone and your neighbor's phone interfering as much as possible.

However, this certainly does bring to light the fact that keyboards really shouldn't use something so weak anymore; if people are going to pull credentials off wifi, they certainly could get them off keyboard streams. (usernames, passwords, etc.)