When having FreeCameraPlayerInputs enabled, the interactions happen at the block the freecam is looking at. (only within placing distance of player.) Is this intentional? I have had this issue for almost a year so i just assumed it was intentional, but i saw that its not supposed to work like that.

No that's not intentional. And in my test instance in 1.19.4 the interactions still happen correctly from the player perspective (meaning that it hasn't broken/changed at some point recently). So I would first suspect some kind of mod conflict maybe?

Can you first try in a test instance with just Tweakeroo and malilib, and if it works there as intended, then start bisecting which of the additional mods you have is causing the conflict. The first suspects would be any other free camera mods or similar.