I built 1bce5aa5fd07412045e9819770b16975fb5ab2dd with sway 1:1.5.1-1 and wlroots 0.12.0-1 (Arch packages), and when I use wlrctl keyboard type "foo", I get "Unsupported modifier: 'ALACRITTY_LOG=/TMP/ALACRITTY-1348.LOG'"
I think that the actual modifier in the error is irrelevant. Here, ALACRITTY_LOG happens to be my first environment variable by alphabet in my alacritty session. If I run the same command via bemenu, I get "Unsupported modifier: 'SHELL=/BIN/ZSH'"
wlrctl keyboard type "hello world" modifiers ''
returns
hello world
as expected (no error).
Should be fixed.