@pbearne This is a solid start. I left a few mostly small comments below, but there are two bigger things among them which are critical but missing here:

1. We need to add support for the featured image output, as it is covered by the conditional lazy-loading logic as well.
2. We should add at least one more test to cover the actual wp_filter_content_tags() integration of the code here.

LGTM

@pbearne @adamsilverstein Overall this looks solid, though there are a few things we need to fix as they can introduce bugs.

In light of the currently ongoing work to fix image lazy-loading in block themes (see https://core.trac.wordpress.org/ticket/56930), we should make sure to test prior to merge that this works as expected in a block theme.

Looking at the code here, things look like this may not be affected by the double execution bug from core (due to the more explicit context check present here), but we need to verify that. Adding fetchpriority="high" to too many images may be even worse than lazy-loading too many images.

@pbearne @adamsilverstein The implementation here LGTM, with the following caveats / known issues:

• For block themes, it currently doesn't work on featured images since the featured image block is broken in regards to loading="lazy".
  • This was recently fixed in Gutenberg (see WordPress/gutenberg#45534).
• For block themes, it already works for regular content images, however the first content image will still have loading="lazy" on it due to the double content parsing bug in core.
  • A WordPress core fix is being worked on (see WordPress/wordpress-develop#3560).

Both of these problems are not critical, since at least this PR doesn't make it worse than it is; and both of these problems need to be fixed separately, so this is good to merge IMO.

Will update the module description though, as it's a bit too technical and doesn't describe the performance impact.

Thanks @pbearne @adamsilverstein LGTM