This is the giant gaping hole in the entire theory, yes.

The same when when they walk into a court and think that if they recite certain special magic phrases the judge just has to hand over authority to them. Like, buddy... Your premise here is that the court secretly know they're refusing to follow the rules and if you just call them out on it they'll throw their hands up and say "Ah, you got me!" Why? If this really is a giant conspiracy that the entire government is in on, then who is going to stop them? They can still just throw you in jail anyway, because they control all the levers of state power.

Arguably, it's blessing they don't see it this way, because if you buy into all the shit they've bought into, the only real logical response is violent revolution.

But it works on SovCits because a) they're self-selected for gullibility, and b) their individualist, hardcore libertarian mindset makes them incapable of comprehending any problem that cannot be solved by individual action. Overthrowing a corrupt government is the kind of collective response that they simply cannot conceive of working.

So it must be possible to hack their way out of the system by cleverly reciting the special mantra that only they know because they're so clever and special. It's the only thing that fits with their individualist fantasy of simply opting out of every social contract / construct.