What I really want to know is whether it is a hardware problem, or a software problem. Could I plug my android phone into a computer via USB and have it act as a hardware ke
Your Android already identifies with a VID/PID when plugged into a host. It already has an interface for Mass Storage. You would need to hack the driver at a low level to support a 2nd interface for 03:01 HID. Then it would just be a question of pushing scancodes to the modified driver. This wouldn't be simple, but it would be a neat hack. One use would be for typing long random passwords for logins.