IPadOS 14 external keyboard arrow keys issues

I can't reproduce this either. However, I suggest that you hold down Command and then press Delete, as an alternative to your method. This will delete everything on the line that's left of the cursor, and will hopefully solve your problem. (You can hold down Option to delete single words. Experiment with holding down the Option or Command key, and pressing either Delete or the arrow keys. If you hold down Shift with either Option or Command and then press the arrow keys, you will be able to select text word by word, or line by line.)

I've noticed that certain applications seem to trap the gestures, even when they're no longer active.

The only time I've been able to 100% narrow down something trapping various shortcut keys was with either Apple Remote Desktop (the built in screen sharing functions), or Microsoft Remote Desktop.

Even though I clicked outside of the app and started using something else, something caused notably my ctrl+←/→ to stop working.

I unfortunately do not remember the specific steps I took to resolve the issue. Whether it was explicitly sending focus into the remote connection window, and then (with the mouse only) explicitly out of the window, and onto another app that is not just the Desktop, might have fixed the problem. Otherwise, I may have just closed the window in frustration.

Either way, this issue is one that you may have to do some personal diagnosing to figure out. Check for any running apps that are notably not native (Java, AIR-based, etc.), or have some other form of deep integration (trapping keyboard events and sending them to another computer is pretty deep), that may be causing this issue.