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IhavenonameSDA
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tl;dr Twitch has made some questionable decisions in the past, but this one is completely indefensible.
In addition to the reasons listed in the original post, this change will destroy marathon and event channels like GamesDoneQuick. As you probably know, during AGDQ or SGDQ this is frequently the most viewed stream on the entire platform, going for a week (168 hours+) continuously, in a format where people do watch VODs for runs they were interested in that happened while they were unavailable. The limit also limits the ability to export an event, which will push many events off of Twitch and onto other platforms.
The highlight policy change is a poorly thought out attack on many the most active and dedicated streamers, aimed directly at removing what they've built up over years and years.
And to anyone who might say "it's worth it" or "just archive your stuff elsewhere"? Deleting archives like this would hit people who've passed away and thus can't archive, mass desecrating digital graves.