The smartcard can isolate the key. The problem is that they don't need it if they compromise the PC. It's pointless if the goal is to protect the current communication. Far as implants, they're possible with anything. Rule is that enemy can never physically possess your stuff or it's considered compromised.

"but also usability issues (even if you could probably sandwich most of it into a single laptop case. Would be interesting to have two screens side-by-side for input and output)."

You should've seen my old VOIP design: a briefcase of cables, boards, and shit lol. Yeah, it will take up more space and have a learning curve. Any strong solution usually does, though. Be skeptical of anything claiming high usability and high security. ;)

"Sort of as a replacement for the hw in the terminals used here. I didn't mean a full Android software stack. Preferably a system without baseband, networking etc."

If you keep the three nodes, then you can certainly use Android devices. If you condense them, then you loose the protection due to all the attack surface. One drawback with Android is most of them have embedded wireless hardware. Tiny risk maybe but hard to tell if you've disabled it for sure. Android on device w/out wireless chip is fine.

"I'm not sure about your use of "NIX" here. Is this a combined hardware/software platform? Google wasn't very helpful."

UNIX or UNIX-like systems. Many of us called them NIX's for short in the old days. Their complexity and security track record make them untrustworthy for defending against strong attackers. They're a last resort you use while still monitoring for compromise. Unfortunately for that crowd, the systems with high security are all proprietary (often defense-only) and similar open-source systems have less assurance and usability. They're all alpha stage, actually.

"So it would seem that using a dedicated (mostly) air-gapped laptop would practically be as secure."

It's lower risk than most things. It's why most of us use that strategy. Your risk is being hit in the kernel stacks, the drivers, or peripheral firmware. If data goes back and forth, then the risk goes up. To be clear, this is a targeted attack by professionals that know what they're doing. Average hacker doesn't do this.

re cascade

They haven't shown evidence of this for years past the meet in the middle. So, it seems fine long as I avoid that. Far as adding risk, it's unlikely given this is merely a basic algorithm application. If you said protocol engines, I'd totally agree. With algorithms though, you can usually get three right if you can get one right. Still want a specialist coding them, though.

re other stuff

The system in question must be evaluated by security pro's before we can trust it. Meanwhile, GPG + air gapped machine is your best bet outside TFC. As for hardware subversion, they might do anything so acquire your hardware in different, unpredictable places or have others order it for you. Far as screen, the monitor cable is the best place for leak. I proposed long ago a shielded cable that works except amplifies signal along unused frequency. Later on, TAO catalog leaked and there's a VGA cable modified to do exactly that. So, there you go.... ;)