the problem here is that when the list shrinks, the cursor sticks to the text field as these (search field and plug-in list) are effectively two separated zones, pretty much like the navigation pane or search field and the content window in Windows Explorer.
If you press TAB after entering the first part of the text, you’ll be able to use UP/DOWN and hit Enter to insert the selected entry.
But I’m a software developer and I know (and did it myself): It is possible to re-route the Up and Down keystrokes from the text field to the list element - at least in most systems. That would be much more intuitive.
PS: Didn’t see the replies to my post, thus the late answer…