I've always said privacy and security are two different practices. Just as one hand washes the other, both wash the face. To address your examples, with which practice applies most:

-$5 wrench attacks - security

-Public knowledge of your spending habits - privacy

-Price discrimination - privacy

-Avoid targeted advertising and manipulation - privacy

-Business competitors seeing your financials and who you interact with - privacy and security

On a pure technical level, without human intervention such as censorship and surveillance tech built on top of the monetary system, tainted bitcoin would technically still work. If humans create an environment, such as a parallel economy, where censorship doesn't exist, it is equivalent to spending cash that may have been used in an illegal act. You personally did not commit the crime, and if your environment is one of censorship resistance, you are only guilty when proven guilty.

If you are in an environment, where surveillance exists, you are correct that every person that used that cash will be targeted.

In today's environment, this is such a specific situation, that it is highly unlikely to happen to the common person.

We are a niche, within another niche, within another niche: cryptocurency > bitcoin/monero > privacy tools. So these conversations are great for thought experiments, content generation, and to develop ideas and make the tech better. Only time will tell if these tools are even going to be truly necessary.