Does this mean that the standard of instruction will fall, or does it mean that the extra qualifications demanded of an FI are pointless?
I see no reason why the standard of instruction shouldn't remain the same as it currently is, as indeed should the level of knowledge held by an FI. Since it is the FIEs who set the standard which is required to pass a Flight Instructor test there should be no significant change.
Regarding demonstration of CPL level knowledge, it is surely more appropriate that FIEs assess the level of knowledge of the FI, rather than the current situation: a lot of expensive written examinations which contain a small amount of GA-relevant information.