[poka]

Still no solution, just deafening silence....

In case that can help someone: After also wasting a few hours of my life, I eventually managed to get sftp/ssh sources with key pair authentication working, both on Libreelec and OSMC.

What eventually did the trick was to wipe out the content of .ssh/known_hosts (take a backup just in case).
I didn't bother looking at the content difference, but the answer is probably there.

Along the way, I noticed that the sources.xml syntax for sftp has also changed a bit.

It went from:
<path>sftp://username:password@Server.com/share/videos/</path>

To
<path>sftp|ssh://username:password@Server.com//share/videos/</path>

Both still seem to work at the moment, but I guess it will be more future proof to update it. 

For people who can't install vfs.sftp from kodi repo on linux, I recompiled it from source and put it in zip file here: https://cloud.p2p.legal/s/yZMs8FL9ExLyPke