So to parse the answer out of the implications that I don't know about the privacy concerns: if privacy is not achieved on the base layer the asset fails as a monetary asset and ultimately is not useful as a global value store.

I personally see privacy as a function of medium of exchange (where it matters most) which is firmly in the layer 2 application. We've had two cracks at enabling layer 2 compatibility. Both have had knock-on effects and unintended consequences. I believe CTV is no different. But the trade off seems so short sighted, I can't believe no one is looking down the road that it would pave. "Shared UTXOs" have no economic analogue beside some communist ideal. You either own something or you don't. But that's an entire tangent.

The point is you don't need to change consensus rules to maintain the underlying asset (beside the Unix time code parms) to enable more private payments, transactions, or layer 2 functions. The calls made to the base layer should only transfer UTXOs from one set of addresses to another. All other functions can be abstracted to the second layer. Look at it this way: [0,1] <-you don't need to change this to do complex calcs in a system. You just need to build hex on top of it and assembly on that, and language on top of that. Stop trying to alter the rules of binary to make things easier, it might break everything already built on binary.