It seems to me that it would be logical to assume that if a value is encrypted via eyaml in hiera that it is sensitive. Based on this, I think all such values should be returned wrapped in the Sensitive type. The result would be that if a String is looked up that a Sensitive[String] would be returned. The same kind of wrapping would hold true for Array, Hash, and Integer too.
This is a good idea, I think it can be implemented as a parameter to the eyaml_lookup_key function. That would make it backwards compatible, and users that want this can opt in and set an option in their hiera.yaml (by default for all eyaml, or for some paths individually).
I know this has been marked "Accepted" already, but please consider implementing PUP-8947 instead, it seems much friendlier, and provides a much easier transition for existing codebases.