Can someone confirm and/or correct my logic regarding this mechanism?
The decarboxylation occurs specifically at that position, because that is a $\beta$-keto acid. In presence of slight amount of heat only the decarboxylation occurs due to the presence of keto group adjacent to it. Actually, in acidic medium only,it decaboxylates in presence of heat as follows,

But no keto group is present at the carboxylic acid group attached at the benzylic position so it cannot decaboxylate.