No like you assumed The seedphrase is not passed directly into PBKDF2 as a string of words. Instead, the mnemonic phrase is first converted back to its binary bits using the BIP39 wordlist not by the function but wallet software.
So the password input to PBKDF2 is this binary string i.e entropy and checksum, not the text of the mnemonic words themselves.
You are incorrect. The
text of the mnemonic phrase is passed to the PBKDF2 function. The mnemonic phrase is
not converted back to the entropy it encodes. As such,
anything can be passed to the PBKDF2 function. It does not have to be valid BIP-39.