Turn off small gray icon that appears always, says "Microphone/iPhone Audio" "Paused/Listening"? Very inconvenient.

You have Live Captions turned on. Go to Settings>Accessibility>Live Captions, turn that off.

That happened to me too, and it was on there for a couple days. It’s under accessibility and captions. If you go in there and look at those settings, you’ll see that something is turned on like live captions.

I took some specialized classes at Northwestern many years ago. Glad you got things sorted out. Enjoy your iPhone.