So i'm not crazy. Thanks.
this would be how
I forced updated mine manually, and so far, I have not had issues with the Physical Keyboard not lighting up. I also did as you suggested, which was powering it down completely and power it back up and the keyboard still lights up.
The only time I saw it 'flickering' is due to Locale flipping my wallpaper during the beginning, but afterwards, it still comes up without an issue. So I don't know what to say why it seems to be a problem for you guys.
I still got problems with my menu and keyboard back light. It doesn't turn on at all until I turn on the automatic brightness and turn it off. But that's only a temporary fix. When I turn off my phone and turn it back on it stops working again. Is there a fix to this? I started getting this problem after the OTA update by air last night.