PR #267 replaces password argument with passphrase when using Login with Public Key keyword and the behavior is the expected one: The keyword fails when an invalid key is provided regardless of the credentials.
The problem is that passphrase argument was added very recently in paramiko, starting from version 2.4 according to their documentation. SSHLibrary supports all paramiko versions starting from 1.15.3 and merging this PR would make it backward incompatible with almost all older versions.
The PR should be merged when SSHLibrary will drop support for older versions of Paramiko.