No, mydict won't be changed. kwargs get unpacked into a new dictionary.
Consider the case where you have:
def print_arg(key=1, **kwargs):
print (key)
print (kwargs)
print_arg(**{'key':2,'foo':3,'bar':4})
In this case, it's obvious that kwargs is a different dict than you pass in because when it gets unpacked, it's missing the 'key' key.