BrokenKeyboard.cs

static class KeyBoard
{
    internal static IEnumerable<char> UnEscape(string a)
    {
        // Stacks keep good indexes
        var lowers = new Stack<(int, char chr)>(a.Count());
        var uppers = new Stack<(int, char chr)>(a.Count());

        for (int i = 0; i < a.Count(); i++)
        {
            var ch = a[i];
            switch (ch)
            {
                case 'b':
                    lowers.TryPop(out _); break;
                case 'B':
                    uppers.TryPop(out _); break;
                case var o when char.IsLower(o):
                    lowers.Push((i, ch)); break;
                case var o when char.IsUpper(o):
                    uppers.Push((i, ch)); break;
                default:
                    throw new NotSupportedException($"Unsupported character: '{ch}'");
            }
        }

        var result = new Stack<char>(a.Length);

        while (lowers.Any() || uppers.Any())
        {
            if (!lowers.Any())
            {
                result.Push(uppers.Pop().chr);   continue;
            }
            if (!uppers.Any())
            {
                result.Push(lowers.Pop().chr);   continue;
            }

            (int i1, _) = lowers.Peek();
            (int i2, _) = uppers.Peek();

            if (i1 > i2)
            {
                result.Push(lowers.Pop().chr);   continue;
            }
            if (i1 < i2)
            {
                result.Push(uppers.Pop().chr);   continue;
            }

            throw new NotSupportedException("Broken invariant");
        }

        return result.ToArray();
    }
}

public class KeyBoardTest
{
    [Theory]
    [InlineData("abcd", "cd")]
    [InlineData("ABCD", "CD")]
    [InlineData("abba", "a")]
    [InlineData("ABBA", "A")]
    [InlineData("aAbB", "")]
    [InlineData("xXyYzZbB", "xXyY")]
    [InlineData("xXyYBbzZ", "xXzZ")]
    [InlineData("abcdefgijklmnopqrstuvwxyz", "cdefgijklmnopqrstuvwxyz")]
    [InlineData("ABCDEFGIJKLMNOPQRSTUVWXYZ", "CDEFGIJKLMNOPQRSTUVWXYZ")]
    public void UnEscape(string a, string e)
    {
        Assert.Equal(e, new string(KeyBoard.UnEscape(a).ToArray()));
    }
}

@Kreator22 по мотивам статьи на Habr тоже решил попробовать решить примеры
https://github.com/insanity13/sandbox/tree/main/Sandbox/Keyboard

Для строк до 20000 получил следующие результаты

Method	Mean	Error	StdDev	Gen0	Gen1	Gen2	Allocated
DimsFromDergachyVersion	5,840.082 ms	37.6586 ms	35.2259 ms	5000.0000	3000.0000	3000.0000	51.72 MB
Kreator22_1	3.766 ms	0.0239 ms	0.0223 ms	718.7500	78.1250	-	5.75 MB
Kreator22_2	6.636 ms	0.1267 ms	0.1408 ms	1937.5000	382.8125	-	15.49 MB
MySolutionVersion	1.358 ms	0.0226 ms	0.0200 ms	500.0000	37.1094	-	4 MB

Классическое решение (аналогично MySolutionVersion):

public static String getTypedString(String keystrokes) {
    StringBuilder result = new StringBuilder();
    int skipLower = 0;
    int skipUpper = 0;

    // Process the string in reverse
    for (int i = keystrokes.length() - 1; i >= 0; i--) {
        char c = keystrokes.charAt(i);
        if (c == 'b') {
            skipLower++;
        } else if (c == 'B') {
            skipUpper++;
        } else if (Character.isLowerCase(c)) {
            if (skipLower > 0) {
                skipLower--;
            } else {
                result.append(c);
            }
        } else { // Uppercase letter
            if (skipUpper > 0) {
                skipUpper--;
            } else {
                result.append(c);
            }
        }
    }

    // Reverse to get the original order
    return result.reverse().toString();
}