Do you know connected host can't talk ISIS to you?
ISIS is false security. In modern platforms OSPF almost always can be
protected (iACL), ISIS in many times cannot. I'd run MD5 in either
case.
Yes, IS-IS is designed to speak to connected
hosts, but will only do so if you enable IS-IS on the interface
facing that host.
The scope of the exposure, while present, is limited to the radius
between your device and the connected host, vs. OSPF which can be
attacked from much farther away.
Running MD5 on your IGP (and iBGP) should be sold at birth.