Welcome to the forum, @EnshroudedShrew
Question 1: Are you ready to install systemd-boot (to leave GRUB)?
If yes, select German and LUKS passphrase containing öä like letters will be accepted and echoed by big dots. (I failed to increase retries (3).)
Summary
cat /etc/vconsole.conf
KEYMAP=de-latin1
localectl
System Locale: LANG=de_DE.UTF-8
..
VC Keymap: de-latin1
X11 Layout: de
cat /etc/default/keyboard
# KEYBOARD CONFIGURATION FILE
XKBMODEL="pc105"
XKBLAYOUT="de"
XKBVARIANT=""
BACKSPACE="guess"
As you mentioned you haven’t put much work (weeks) setting up the
present Plasma 6.1.3 but in principle there is a migration guide (I did not tested)
https://forum.endeavouros.com/t/tutorial-convert-to-systemd-boot/13290/371