If the outcome of removal of ATA is that they remove the freeloaders that are comped status AND still don't fly VA, then all the better IMHO.
The thing to keep in mind is that the "freeloaders comped status" were a big part of the market VA needed to win over from QF. Plenty of people would have tried VA that were QF loyalists and I think the positive VA data and the negative QF data reflects this was successful. Just be patient and time will weed out those who don't fly enough to keep it. To get plat/gold with Qantas you must have been flying a decent amount, so winning those people over to Virgin would be beneficial.
I think reducing ATA to Arrivals is fine. If I'm not flying on that airline that day (ie. no revenue) then why should they give me access?
Certainly if I were one of the elite 'The Club' types we are starting to hear about, that might be a level to deserve ATA, but the "comped freeloaders" like myself will have their 12 months expire and either keep status by way of flying or lose it (or parachute, but that means you did actually take a few flights).
I know I've felt a little bad the few times I ducked into a VA lounge after a Rex flight, but it has probably only happened twice and I don't mind them withdrawing that at all.
People have been pushed to taste the VA flights, to try out the lounges, so hopefully the goal of getting them to switch is achieved if it is going to happen - thats what VA needed/wanted - that was the "deal" as far as I can tell. Now you either fly and earn it, or it'll parachute away (or disappear entirely if you never fly VA).
The 4 flight requirement to parachute to Gold ensured I did that when the opportunity presented itself and the Flexi requirement to use the upgrades ensured I paid more for a few flights I otherwise wouldn't have (BNE-NTL, I think I was the only person in PE on that flight so it isn't like I stopped them earning premium revenue from others). If I end up using it again for a BNE-PER flight I'm looking at booking I'll feel a bit like a I ripped them off a little, but if I feel like I owe them one then I'm inclined to do things like book a friday afternoon flight from Albury with them rather than Rex despite them being a bit more expensive (I've already done that once this year I think).
They've created some good will that means I'll pay a bit more sometimes for them over others and while it may not be big bucks it can't hurt. If they can get people paying extra because they're a notch better than the competition, then that will make them a premium airline now they've exited the LCC arena.
It probably helps that Qantas keeps shooting itself in the foot. I'll never fly DFW-BNE again thats for sure after having my luggage not make the trip. I'll certainly think twice before booking international flights with Qantas if there is a hint of industrial action in case they decide to have a lockout again too. Lifetime status credits are the main thing keeping me Qantas focused (since I should be able to make LTS in the next few years and I can hang on to that once my flying is cut back which should happen after my next move).