>So if that suffix is 8 or more bits, as soon as you have an airtag on your keys, wallet, and bag, you've become a nice easy to track person.

This can be easily solved by disabling the fixed bits if an "owned" device (eg. your iphone) is present. It prevents the anti-stalking feature from being used, but presumably if you can get a phone to follow the person you can probably get a GPS tracker to follow the person as well so that's not really a security risk.

>If the suffix is less than 8 bits, then the 200 airtags around me in a classroom setting will always be falsely setting off the alert - at least one of those 256 possible suffixes will remain always in use for hours with every rotation.

The phone can take the number of airtags that it sees into account. If it saw an airtag with the same suffix for the last 3 hours, but during that time it also saw 300 airtags, it's probably a false alarm. But if it only saw 10 airtags then that might warrant warning.