Issue has been resolved. During init, systemd-cryptsetup uses libcryptsetup to perform the actual unlocking of the LUKS partition.
libcryptsetup itself requires a few kernel modules to work, or else it fails with -ENOENT, which, through systemd's use of error no -> error message, turns into a generic "No such file or directory" message. Effectively, the message is bogus with reference to the keyfile, where it actually referred to the missing kernel modules. The missing kernel modules were "af_alg" and "algif_skcipher".
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