Maybe I was looking at different concept art leaks thean you, but how exactly were the old plans to redesign Twi as an earth pony, Pinkie as a pegasus, and Flutters as a unicorn a sign of Hasbro concedeing to "social justice bullshit"? I think these redesigns were focused more on introducing a new spin on characters that the writers were clearly running out of ideas for, rather than somehow trying to score points.
I agree though that the issue here is Hasbro often getting caught up on tge superficial details of the characters rather than the actual depth of the character (Flutters being a unicorn instead of a pegasus likely has no effect on her personality or worldview) but I hardly think that can be pawned off entirely on "social justice bullshit".
The Gen 5 we did end up getting is definitely worse than gen 4 in terms of both story and characters, with the possible exception of Izzy and Hitch, but we shouldn't assume that a continuation of G4 would really have survived any of the same declines in quality. G4 was already showing degradation in its themes by its last few seasons when characters inceasingly began to treat friendship as some nebulous concept instead of the physical interaction and genuine bond between characters in the earlier seasons. A reimagining of the G4 setting could have helped alleviate this issue by allowing the story and characters to recalibrate themselves back to when friendship was a more complex yet practical component of ponies lives. This could've allowed writers to tell stories about Daybreaker and Chrysalis that weren't held back by needing to be twenty minute short stories with an aesop's and marketing gimmick shoved in at the end. I guess we'll never know though...