I am all for client side embedded servers/nodes, but you didn't solve much if you still need a store and forward server. The only difference here is then, users will be custodial of the signing keys instead of the server offering availability. Is that a good thing? Depends, it comes with its pains. Regardless, metada will still leak, that's the nature of relaying data in a performant way, as in non-onion-routing

Don't get me wrong, all of that effort and work is great, it's by no means a must have and telling people that Matrix has unacceptable privacy issues, while they are using Telelgram and Twitter DM, is a bit unwise.