This is not new. This issue pops up about every three months since it was first noticed in late 2020.
We will be sticking with our existing seed method so as to keep existing paper wallets fully supported and not ambiguous. Note that the Chia implementation is still compliant with v4 of the spec (last one at this writing 2022-02-17.)
No serious impact. It’s ultimately going to be a flag for the HSM or hardware vendor. Many HSMs will not care as they don’t need nor want to support existing Chia paper wallets (24 words mnemonics.) Some end user hardware providers will want to make it so that you can import existing Chia paper wallets.