You are definitely right that 90% of the functionality of NFTs is already implemented in current systems. But the difference is that NFTs integrate cryptography in a way that makes these actions much more efficient. It's easier to plug a smart card into a computer and generate a cryptographic signature than it is to sign a document in person, and it's also harder (but not impossible) to argue that cryptographic signature wasn't generated by you. And when it comes to deeds, it's often times necessary to search up what encumbrances exist on the deed and what happened to it in the past. Blockchains don't turn this from impossible to possible (a land office can already just have a clerk find and deliver this information), but they do make it faster, and the blockchain's properties store this information and make it accessible in a way that we already know how it works.

I want to stress that while most cryptocurrency assets follow the principle of "code is law", there is no reason that NFTs representing real world assets can't follow the principle of "law is law". As in, human law written by legislatures and enforced by courts.

In a real world implementation of this system, private keys would probably be stored on a physical device, in a way that said keys are never exposed at all. The functionality already exists to embed the signing software onto a smart card, and that smart card can be one's ID card (smart ID cards are already used for this purpose in Hong Kong, where they can generate cryptographic signatures that replace physical signatures on contracts).

In addition to that, there is always the escape hatch where, according to an established legal process, a court or government authority can declare a token invalid and re-issue it.

While NFTs could, in theory, entirely replace paper deeds, the argument you make is one among many reasons why doing so would be a bad idea. Instead, deeds would probably only optionally be recorded as an NFT.