Here is how everyone reacted when this game came out in Japan:
"I can't believe you drug that lesbian. This game is gross"
"I can't believe Fire Emblem has gone down this path where we having a mode you can touch characters. Wtf I hate this"
All kinds of people against the game with these additions.
Now, Nintendo removes both things that vocal people DID complain about.
"What? It the dialogue was mistranslated!This ruins everything"
"Huh? How dare they remove an entire game mode!"
So now the game is ruined because they removed things people DID complain about, NEITHER OF WHICH were important to the game or even important to the series.
Censorship or not, 90% of people who wanted this game were not buying it for either of those things.
Nintendo may be playing a mommy to protect the kids who shouldn't be playing to begin with, but it is still absolutely part of localizations. If we have adults that think Nintendo made a Mario toy where he is jacking off, we have adults who are going to take this the wrong way.
The only way for Nintendo to cover all bases is to make a DLC patch for older players to uncensor games after proving their age or something. This way, they still get to be a parent and adults get to have their unnecessary content that was unnecessarily removed.
But in the grand scheme of things, people don't care. This doesn't ruin the game. That convo being in or out doesn't ruin the game. The people upset by this are going to be a minority.
The only reason Fatal Frame likely did bad is because it was digital only, a series that ALWAYS sold poorly and Nintendo did no effort to promote it. It was doomed even if it wasn't censored.
This is going to have the impact of removing slots from Pokémon. Very little to none. It's not important, it's just principles.