That's... not really good evidence. Your story sounds almost identical to the "facebook/google is eavesdropping on me" stories that frequently make the rounds on popular discourse. Unfortunately, that's basically the Sasquatch of the privacy world (ie. there are many people with anecdotes claiming it exists, but very little in the way of actual evidence like network captures or decompiled binaries). If anything, it's worse than Sasquatch because at least with Sasquatch you could claim that there aren't many of them and/or they're actively avoiding humans so they're hard to photograph, but the "facebook/google is eavesdropping on me" stories implies it's happening to everyone so capturing an instance should only be a matter of technical skill rather than luck.

None of this is evidence of decryption.

At best it’s circumstantial anecdotes pointing to Facebook extracting topic metadata out of your convos. This can be done clientside, no decryption necessary. (And it’s easy to prove that it’s being done if that’s the case)

The person you talked about may have searched for the term, and knowing that you are friends facebook can easily assume that you would be also interested in this thing. It may also operate based on metadata of you have talked recently.