I think there should be a mode for the mouse to control the crosshair instead of the camera. This would be good for being able to precisely place/break blocks and aim without having to rotate the entire camera, especially while playing in third person. And moving the pointer to the edge of the dead zone would move the camera.

This could be good with the Steam Deck, which has both a touchpad that could be used for the mouse as well as a joystick that can be used to make quicker turns of the camera. It would also be useful for playing with a Wii Remote, since this was the control scheme used in Wii games.

This is similar to Bedrock Edition which has multiple modes where the player can interact with things within range that are not precisely at the center of the screen, with touch controls and VR.

In MidnightControls 1.9.0, this feature was added to touchscreen input.
This means that it shouldn't be too hard for me to also implement it for controllers in 2.0.0.

In 1.9.1, it's now possible to enable touch support in controller mode, allowing you to break blocks and hit entities anywhere you place your finger (If you also set touch mode to "At finger position")
It might also work with the touchpads, but the cursor is currently hidden in this mode, making it hard to target specific spots.