From what I’ve noticed personally over the past years, and from my readings throughout different forums, the problem does seem to be heat and battery related.
The touch screen is noticeably unresponsive for 2 seconds (sometimes 10+ secs) when the device warms up. Loading up a demanding app or website while the device is plugged in can replicate the problem most of the time. The fact that the issue is only happening a year or so after a new/refurbished is opened is probably due to the battery inside swelling up, caused by heat (possibly overcharging).
I bet the spotlighting issue is battery related as well, where the swelling puts pressure against the edges of the screen.
I still haven’t reached out to apple about this issue, since most people here don’t seem to have any luck getting a free replacement for devices that are way out of warranty. I’m starting to believe that any replacement will eventually get this problem.
It would be great if they could just do a free battery replacement. I think this would work out just as well as a full device replacement, for the unresponsive touchscreen issue. It might even fix the spotlight issue as well.
I’m still rocking my 2017 iPad Pro 12.9 as my main computer despite these issues.