Is it possible to build a full node that stores only the latest UTXO set and the latest 2016 blocks for difficulty adjustment?
You can check this out to know more about pruned node, but ways to privacy can be costly and best to download the full blockchain.
=https://bitcointalk.org/index.php?topic=5213552.0Pros and Cons of Bitcoin Node types (Full node and Prune node)As far as I can tell, if I run a pruned node, when I want to look up a certain public key I will have to reference other people's nodes. Basically a pruned node is no different from blockchain.com/explorer.
Completely different. If you have pruned nofe, you are running full node, not necessary to download the whole blockchain, but is is advisable to download the whole blockchain if you want to enjoying running full node. Blockchain explerers are their party, many people will use their IP address to look up bitcoin addresses, just a way many address Les can be connected together and resulting to no privacy, you can check this including the mempool on Bitcoin Core if you are running full node.