1. NKRO(because you need the whole HID stack for that to work)
You need the whole HID stack, host and device side, for
any USB to USB converter to work. You have far more control working at a µC level than you do with Linux.
2. Less development time - once in OTG Device mode, it should be easy to program our ARM device to do whatever we want, reusing code already written for Linux.
Hahahahahah oh my sides. No, really. You're almost certainly going to have to be writing kernel level code. For OTG controllers. Most of which are specced in the "hand waves,
and then magic occurs" form. I've done this, it's a long way from fun.
On the other hand, most of the µC providers also give reference implementations. ST, for example, have USB host and client reference implementations, specifically handling "reading from keyboards" and "pretending to be a keyboard", which are configurable as to which USB interface they talk on. I haven't tried this specific case, but for the STM32F4 discovery kit it should be a case of using bits of both and putting some glue in the middle.
Also allowing the usage of high level languages too
Any language you can reasonably consider using to write controller level code under linux, you can also use to write controller-level code on an ARM µC. And probably even stuff like the AVR if you try hard enough.
There's also the issue that your proposed converter will almost certainly have to be externally powered in order to stay within the USB spec. The USB spec restricts non-enumerated devices (i.e. those that have just been plugged in and haven't finished starting up yet) to less than 100mA of current, and there are very few existing SoC implementations that can deal with such a low draw. Even the raspberry pi zero needs 100mA+ at idle with a keyboard plugged in and everything else (HDMI, LED) turned off - boot requires 250mA or more. If you try to draw too much power before enumeration, a USB controller can, and
should, assume that your device is faulty, and cut all power to the port to save itself.
What you are proposing is overkill, and it's daft.
[edit] I should probably mention that, no matter what you do, you're only going to get NKRO
if the "slave" keyboard already supports NKRO. Hasu's controller doesn't do NKRO because it only goes as far as doing boot protocol for the keyboard, there's no reason it couldn't do full enumeration and thus full NKRO (again, for keyboards with NKRO) on AVR.