Might be a good move

That sounds like both a cool setup and a fancy way to waste taxpayer money. Not super secure to be using a PIN instead of a password as the second authentication factor, though.

You could certainly make that work on Linux without any changes by just leaving the username empty and typing a password for the PIN, so I'm not sure why at you think it would present a problem for a standard greeter or why support would need to be "shoehorned". However, if you wanted to make the login UX superb, with a whizz-bang popup window saying "Hello <Name>" like you described, you could certainly make a custom greeter that watches for the device to be plugged in and then uses PAM to authenticate after plugging it in. You could do the auto-locking thing with a few custom udev rules and a script to do xscreensaver-command --lock when the key is removed.

Whether or not you wrote a custom greeter, you'd want the complexity in PAM so that people can still unlock xscreensaver by plugging in the device and typing the PIN in the xscreensaver password field.

In the end, these problems are not hard. There's no reason for these programs to be complex, and there are good reasons for them not to be.