you drastically overestimate how many users understand the address bar.

i'd say probably 50% of users couldn't tell you the difference between the address bar and the google search box.

This hasn't been true since the first third-party JS script was published. In reality a giant proportion of web users today are 'on Google' or 'on CloudFlare' or 'on CloudFront' even if they aren't aware of it. The address bar has been broken in this regard for at least a decade

I feel like this conversation comes up in every signed exchange thread, and it's also always pointed out that this is how CNAME records and CDNs already work, except now the response is signed by the author.

It makes no difference for privacy in that you already told Google which page you were going to by following the link. If they implemented AMP as a more traditional redirect instead of a cache then they would get the same information and you would still see the non-Google site in the address bar at the end.