This proposal is envisioned as part of a transition to Orbit SSF, or some other resolution outlined in Vitalik’s recent guide to this part of the roadmap. In Orbit SSF, small validators have a lower activity rate, alleviating issues of signatures aggregation. A further analysis of how finality can be designed to accrue in Orbit SSF can be found in a recent research post.
As outlined in the linked post, I agree that there are some nuances to the issue of 1-ETH validators. It will make it more difficult to reach “full finality” (that is to say, finalized by the entire validator set) in a timely manner. Furthemore, it makes it possible to stake with very low risk for pools, likely necessitating stronger individual incentives.