Solutions are at hand!
Out of desperation I had filed a warranty claim with Logitech and after some pushing on my part they sent me a new replacement keyboard case. Notably, the new case carried a different part number and has a different appearance in that the keyboard background is no longer space grey with black keys but is all black. The new keyboard is even branded differently as Logi by Logitech. However, the replacement keyboard did in fact address the key drop, shift key and space bar odd behavior, and lag. Clearly the new case has some different firmware that addresses the problem.
However, within an hour of receiving the replacement keyboard case via UPS, I also gained the ability to download iOS 9.3 beta 2 from Apple which also has been reported to solve the problems. Out of curiosity I put the old faulty keyboard case back on the iPad Pro to see if the iOS update would fix the problem. Interestingly something happened I have never seen before on an iPad. A notification popped up of an "Accessory Update" being available as soon as I connected the old keyboard. I ran the little utility and it appeared to update the Logitech keyboard case firmware! After letting this run, the old original keyboard case behaved just like new and there are no longer any detectable errors. Notably, the accessory update did not run with the new replacement keyboard so it obviously already had the firmware update built in upon shipment.
Now the decision I face is which keyboard to return. The original or the replacement. The new keyboard case seems to contact the iPad screen in an unhealthy way which is a problem I have heard about from others. This leads me to think that maybe I should keep the original.
At any rate, a fix is in the works and you can get it now by signing up for the iOS beta testing program and download iOS 9.3 beta 2 or you can just sit tight and suffer through it until iOS 9.3 is released to the public but I am not sure when that might be scheduled to happen.
By the way, the Night Shift mode in iOS 9.3 is really nice in that it reduces the blue light from the iPad screen for night time viewing thus interfering less with your circadian rhythm and reducing eye strain. That alone might be a reason to try out the beta versions of iOS.
Hope this helps everyone. It sure has been a frustrating month or so dealing with this issue.
Cheers!