Excellent find, thanks! You're right, with 'keydown' blocked the UI breaks. I've tried to block 'keydown' mainly to prevent the keyboard focus from escaping the overlay when the user repeatedly presses TAB, but that doesn't work for various reasons, it seems.

I've been trying to play with 'tabindex' attribute, as well as intercepting 'blur' and 'focus' events on the document and overlay levels, both in the capture and bubble phases - I've had some glimpse of success, but it's not yet working as I'd want it to. So for now I'll disable intercepting 'keydown' completely, and address the escaping focus issue in a separate PR.