I'd like to do this in SwiftUI and macOS. I can change menus in response to state, but I need a nice way to globally observe the option key.

No. I ended up writing my own outline view from scratch, that dealt with lazy disclosure. Maybe I should open source it? I don't know if there is a better way. If you find one, please share it here.

I put the code that I wrote before in a package. See my answer.

Actually I take that back. Even if I can observe option key state, if I change state when the menu is open, the menu just closes, instead of rebuilding and displaying, which would give the AppKit-like behavior.

(I'm editing this comment after you added some content to your post.) I see now, you're using the mouseEnter/Exit flags with the tracking area. I'll try that now.

Okay, I got it working now. Strangely, your example (translated to Obj-C) did not work for me until I removed the NSTrackingCursorUpdate flag from the tracking area. If I have that flag, then I have to set the cursor in the cursorUpdate method. My calls to set or push an NSCursor in the mouseEntered/Exited are ignored. If I remove that flag, then the calls in mouseEntered/Exited work as you have them here. Thanks!

Yes, I've restarted the phone and Xcode. The phone is showing in the Devices window. Other apps compile and run on the phone.

Thank you so much. I will read study those links more today and later as I have time. I added a reply with some further info; I wasn't sure if a comment like this would accept source code snippets.

I think coalesced events are a different thing. That allTouches is (I believe) for when multiple fingers are on the screen or touchbar at the same time. Whereas "coalesced" means when the user is moving something like a stylus very fast, so you get one event but it has a kind of backlog of multiple events or touch/stylus positions inside it. Normally you might not care, but for a drawing app your want that path.