Good question. Yeah no idea - the email linked in OP says they're going to send a new proposal, I'm assuming it will cover how they're planning to handle it. And I guess that yes blocking second level domains that have a third level already registered is the pragmatic choice.

They are grandfathering existing third levels and existing email forwarding services. The new RSEPs will just discontinue offering the services as new services, with Verisign saying they will take responsibility for ensuring that there will always be at least one registrar who supports both.