NoNoeWayGeneralNick [...] they make 0 money off of the community medals
Directly sure but competitive participants are more likely to be older and whale on the game. Not to mention like you said, attracting new players in another layer of the game breeds a healthy engagement leading more people to spend. While we're focused on our territory, what about charity medals? Are they seriously going to shoot every organization and event in the foot from this point on?
There could be a sizable loss, especially in more niche communities like MvM testing and events etc. I honestly figured this was a result of some technical issue with the item schema instead. I hope they are willing to at least work something out because we all know what happens when a feature is tabled by Valve for something better soon(tm).
You're preaching to the choir on that. But remember, it took them literal years, as a billion dollar company, to roll out a sub-par anticheat update that finally made their casual gamemode playable again after the bots. If it took them years to fix that - which certainly has a bigger impact on newer players than 3rd party leagues - I have little hope that they will put in the work to keep up with all the medals we hand out.