If a homeserver adds a fake device to an existing user of a room, the
default behaviour of Matrix clients is to implicitly trust that device and send new messages to it. So any homeserver used by any user in a room could read future messages transparently and without any indication to the user that this is happening (unless all users in the room have opted-in to the "do not send to untrusted devices" knob).
This defeats the entire point of end-to-end encryption. The entire point is that you shouldn't have to trust intermediary servers. If Matrix clients had a giant red flashing warning if you disabled the "do not send to untrusted devices" knob, then maybe this would be excusable -- but they don't and it is off by default.