This is the dilemma. There are the 2 opposing sides to the descriptions offered and there is an abundance of both, much of which is word for word parroted among the different sources.
On the one hand Kashmiri Chilli is claimed to be not spicey and used for colour. On the other is the claim that chilli grown in Kashmir is spicy and the products sold as Kashmiri Chilli Powder and whole dried Kashmiri Chilli are not actually from Kashmir at all, but are most likely Byadagi / Byadgi / Beggi and even more likely (as with most powders at least) a blend of chillis sourced from multiple regions.
I doubt we will ever really know. I will send and email to my local spice merchant and leading authority, Ian from Herbie's. It will be interesting to see what he has to say about it. I have researched the actual types (cultivars) of chillis grown in India including Geographical Indication listings, the ratings in Schoville, Percentage Capsaicine and ASTA Colour value.
From the Spices Board of India (Gov't of India):
Byadagi (Kaddi)
ASTA Colour Value 159.9
Capsaicine - Negligable
Kashmiri
ASTA Colour Value 54.10
Capsaicine - 0.325%
This would indicate that Kashmiri grown chilli is in fact Spicy and and has a much lower Colour Value.
https://www.indianspices.com/spice-catalog/chilli-1.html