I'm not going to argue about your interpretation of the word unlimited and wish that its use was either banned or strictly enforced in this (and similar) contexts. That said, until accountability is legislated and enforced, it is not reasonable to assume that unlimited means unlimited. Just as marketing abuses the word, customers abuse the concept. That's especially true in a domain where processes can be automated and distributed, by some means or others.

That policy is there because some users were incurring >$500 in AI costs in ultimate.

Out of tens of thousands of users, the top 100 were using 48% of total AI costs.

Kagi is bootstrapped, it can't just hemorrhage money like this the way the VC-subsidized AI startups do

Maybe your usage might not be affected, I propose to check for a month and if it really goes over the limit, you have the option of canceling the subscription.

It definitely is worded in a way that it can either be interpreted as (unlimited searches and unlimited premium ai) or (unlimited searches and premium ai).

It also may not help that they did not enforce the fair use policy until now. At least that is what I read out of their blog post.

But the fair use policy has been included a long time. I checked 2023-12-25 and found it there, might be available earlier, but no interest in looking harder.