Will a Python list ever shrink? (with pop() operations)

Yes.

Python (at least the CPython implementation) uses magic under the hood to make lists as efficient as possible. According to this blog post (2011), calls to append and pop will dynamically allocate and deallocate memory in chunks (overallocating where necessary) for efficiency. The list will only deallocate memory if it shrinks below the chunk size. So, for most cases if you are doing a lot of appends and pops, no memory allocation/deallocation will be performed.

Basically the idea with these high level languages is that you should be able to use the data structure most suited to your use case and the interpreter will ensure that you don't have to worry about the background workings. (eg. avoid micro-optimisation and instead focus on the efficiency of the algorithms in general) If you're that worried about performance, I'd suggest using a language where you have more control over the memory, like C/C++ or Rust.

Python guarantees O(1) complexity for append and pops as you noted, so it sounds like it will be perfectly suited for your case. If you wanted to use it like a queue and using things like list.pop(1) or list.insert(0, obj) which are slower, then you could look into a dedicated queue data structure, for example.