Isn't the eIDAS 2 wallet approach a legal requirement of eIDAS 2 (which is an EU regulation, i.e. the law).

It is, mandated by the EU commission.

Instead they could have mandated the use of eIDAS 1 to all countries + extend it with attribute/credential support, and let countries choose their implementation (cards, SIM, server-side).

Instead we’re back to the drawing board with the big shortcomings highlighted in this thread.