Oh yeah, absolutely. I think there are plenty of privacy concerns that should be addressed. But I don’t know whether the OCR is processed locally or not. I know the plan for Windows 12 at least is to complete a good amount of the intelligence processing on-device, though that is reliant on specific hardware. And I don’t know how or whether these new features factor into that or not.
I'm not quite sure. I don't believe Microsoft has detailed exactly how it works yet. Though at the very least, it being baked-in to the Snipping Tool makes it more convenient for the average user.