The candidate still has to be endorsed that he/she has satisfactorily demonstrated touch down auto's in their instructor rating prep.
Personally I think the ruling makes sense. A DPE can do an instructor rating flight test in any aircraft type, and they may not be current in that type.
The candidate is still being signed off to do touchdown auto's but it sounds like it us to help mitigate having an accident in the flight test.
It doesn't read to me that the industry is dropping touch down auto's altogether and no longer teaching them.