https://github.com/warner/wireguard-vanity-address
Although not as dangerous since the entropy of the rng is (mostly?) still there. If I'm doing the handwaving right, it's base64 where each char contains 6 bits, so you reduce the effective keysize to 256-6*$num_chars -- cryptographers tell me how wrong I am :)
My biggest worry would be some sort of spoofing. An attacker may be able to impersonate you (or rather a server you control) if they generate a similar vanity key and convince a 3rd party to accept it as yours.
Correct: you reduce the search-space of the private key, but you simultaneously increase the cost of brute-forcing by the same amount because finding keys to try in the smaller search-space takes more work (the same work as generating vanity addresses).
As long as brute-forcing is the most efficient way to crack the attacker has to do the same expected amount of work on vanity addresses.