Re: Is he off his rocker?
I think the idea is bonkers too, but the SSH key issue is already solved. We use LDAP to hold public keys at my org, as the home directory is created on initial login only, so doesn't initially exist. We get the user's key as part of registration. A combination of SSSD and SSHD config sorts this out.
...actually scrub that. You'd still need to use a password to decrypt the home dir container, so this wouldn't help much. Oh well!