This is a short sighted reaction. the change is great, it solves this problem for the time being while we wait for something better.
This entire space has been broken since launch and has been largely ignored by a lot of people.
This change is a good change, but it demonstrates how the real problem is not the 'assimilation' or conversion system it's self but specially the laws and concepts that surround it.
Let me explain:
Let's look at Ethnostate, what does that even mean? Conceptually it should model a society that see it's Ethnicity as it's founding value. But what about racism, are those the same and one? No, you can have a soft ethnostate that simply discriminates against other ethnicities, or a hard one that actively exterminates them and focuses on replacement. Either way, one of the defining traits of such system should be an increase in birth rates and the idea would greater population of territories.(There is a name for this in Germna that I won't be writing here).
Now on the other end let's look at Multiculturalism, to me this society is trying to represent a very Laissez-faire society, where the concept of nation, state and ethnicity has been erased. In this society maybe pops can change with time, but the central trait should be nearly full tolerance, and possibilities. Maybe with some negatives in politics and military. Given that the lack of connection between peoples makes them less cohesive and harder to direct to a common united goal.(That won't necessarily serve their private interests)
Then we go into Racial/Segregation... Again, what does that even mean? Isn't the Ethnotate supposed to be the policy/law of racial segregation? This one is bonkers, maybe it could be the "lesser" Ethnostate as I talked about, and the one above could be the hardliner.
Then we get to the Nationalist one, this should be the only one that favors pop conversion explicitly, as it was in history.
The key thing here is that the concept of nation doesn't have to be tied to ethnicity as it sometimes was in history, and this is the central point.
This reveals the real problem of the current system. The problem is that ethnicity and culture currently are largely treated as the same thing.
And throughout history they have been very different. A Greek Roman citizen, would have been a Roman never the less. In some regions of the world, over time, this led to situations, like what you see in Spain, where clearly there are people who have all sorts of dna/ethno ancient backgrounds and therefore look different, but are all considered 'Spanish', even ethnically, so here we see the concept of ethnicity being constructed. Likewise you have immigrant countries like the USA, that have all sorts of people who migrate to the country and don't necessarily mix, but do adopt a sense of American as an identity that ultimately unifies them. You also have scenarios like in some African countries where they have a hard time convincing everyone that this new state-level national identity(that they are supposed to adopt) is better for everyone and they all should be on board, instead of fighting each other for supremacy.
This all points to the fact that something resembling "culture" has to be treated differently from ethnicity. I think it is also important to not reduce this 'culture' simply to an idea of national identity, since it by definition also involves other elements like religion.(as seen in the secular vs religious state debates that still exist today)
It's interesting that CK3 for all it's shortcomings explores these elements of people and religion in very creative ways, in a period that didn't even have "nations".
So all in all, as I wrote above, I think it's a step in the right direction, but the truth is that the entire system needs to be re-worked from the ground up. The game currently is very ethnocentric, as I explained above, so it's not accidental that Ethnostate ends up being the best option(depending), the problem is not that pops now can be, correctly, as it was in history, converted, but rather it's the entire logic of the system and it's concepts.
If you've read this far I hope this was useful, PDX is clearly trying but more changes are needed. This patch is still better than before.
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