I wonder how long they'll stay up for. With the lower orbit, I suspect they'll have a short lifespan (unless they have a motor onboard to push them along).
Using a pretty simple atmospheric model going from the original 1,325 km to the newest 540 km altitude, the air density doubles (1.990x).
Then there's the increase in velocity since the orbit is now smaller, which is about 300 m/s.
So overall the drag force doubles, but there's no way to tell how long the lifespan is without knowing a coefficient of drag and using a much more complicated atmospheric model that takes into account things like Sun and geomagnetic activity.
Do you see yourself able to fully automate that process? The Falco -> slack notification -> manual ban doesn't sound like it will scale very well (but a nicer workaround than outright removing the free tier!).
It's not just about whether the US government trusts US companies more than Chinese companies; it's about gaining access to that data.
You can issue warrants warrants for your own jurisdiction, within your own country. Once data crosses country borders, it's much harder to get access to. The US (understandably) wants this data within their own country. Similarly, China also wants this data within their own country.