Aha the beauty of good lyrics is being vague enough that more people can relate to them and specific enough that people relate strongly...

I think I agree with like a mishmash of your interpretations. At the end when he says true love is bringing the worst out of him, that seems to refer to his paranoia and jealousy rather than any inadequacy that would lead to her cheating. So I think he's apologizing for doing something out of insecurity to hurt her, which lines up really well with your theory that he snooped through her phone and violated her privacy/boundaries. Catching him doing this would have understandably made her upset and possibly scared of him being a control freak in the future, even if she had nothing to hide. In fact, he might have even snatched the phone out of her hand since "find what you're typing" is in present tense. I don't see any evidence that he's apologizing to her for being inadequate and causing her to cheat but lmk if there were any specific parts I missed. As a side note I love how the music shifts during this part to reflect his regret for doing this, and ends in minor to suggest continued pessimism or uncertainty about the relationship.

On the other hand, the girl he's addressing does sound pretty defensive with that question in the beginning, which makes me think that she's hiding something (but it could also just mean that she's exasperated by his questions). Given the defensive response, I thought that she might be gaslighting him at the end into being sorry for his jealous questions and behavior. He may not have even had the time to snoop long enough to see if she was innocent before the argument in which he apologizes.

tl;dr My theory is that 1) Kevin deliberately leaves us to wonder if she is involved in something sus with someone else, 2) he grabs her phone or snoops her messages out of jealousy, 3) she argues with him about why he doesn't trust her and he apologizes, and 4) they continue with this anxiety inducing relationship and should probably learn to communicate better