Yes, IO, that is the EASA intention.
But, I understand, those affected will be able to continue as PPL/FIs for which they may receive remuneration.
The only thing they would lose would be the 'commercial' description of their licence.
PPL holders will be able to instruct for remuneration - without needing to sit the 'commercial level' exams currently required. But it will be largely up to the FIC schools to ensure that instructional standards are maintained.
This should help expereinced PPL holders who wish to do some part-time flight instruction; if it reduces the openings for CPL hours-builders then the airlines will probably have to go back to selecting and training their future workforce themselves. Much like any other industry which needs specific skills from its workers.
One other point which isn't very clear, is whether organisations approved by the CAA to conduct flight training outside Europe will be permitted to continue to do so under EASA. Certainly all their FIs will have to hold EASA licences and ratings, rather than holding FAA licences and raings and CAA authorisation. Not to much of a problem for PPL schools, but the effect will be on those instructing at CPL/ATPL level (such as the Oxford trainees in the USA) remains to be assessed........