The hardware today doesn't have a "base private key" (or public key) in the sense you mean. I feel like you're thinking about this like it's RSA, which it really isn't. RSA is weird because Encrypt and Sign are related operations, that is not how most things work. So you'd have to use key agreement plus symmetric crypto, and you'll struggle to fit everything into the current data structure sizes.
You've correctly identified most of the tricky bits: the real algo involves key agreement plus symmetric crypto, it's a tight fit size-wise, and not all hardware has the necessary capabilities. However I think you're wrong about the conclusion. Can't say for sure though, as I didn't produce a working prototype. If you actually see this and want to discuss it in more detail you can find my email in my profile.