Yes, keyfiles can be named anything with any extension. It would be useless to really do that for a VeraCrypt generated keyfile, as like you said any reasonable attacker would know that it’s a keyfile. If not that its a keyfile, at the very least they would know it is most certainly not a photo/video file. That being said, using custom keyfiles, like a photo or regular text file, CAN be hidden in plain sight. Or even better, having a photo in an encrypted partition (hidden partition if super paranoid) that is named just like every other photo that only you know is a keyfile.
Yes, there is a trade off. You said it perfectly. To mitigate this, you could use multiple keyfiles. It is up to you what you think is the best approach but you are understanding it correctly from what I see and what you said.
As for recommendations, I like Filen.io. There are also others like Mega.io, Internxt.com, and Proton Drive. As for lifetime plans, be careful as they can be cancelled at any point or if the company shuts down. Lifetime plans are notoriously known to be unprofitable for companies for the vast majority of users who purchase them. That said, I do trust that Filen.io’s lifetime plan is trustworthy and worth it. It’s 30 euro for 100GB. The reasons I believe it to be trustworthy is because it’s a small amount of storage for them at a decent price. It’s not like they are offering terabytes of storage for 200 euros or something.
Hope that helps.