Good news i feel.
Lie flat is never going to be viable on genuine shorthaul routes, so them accepting they need to upgrade the current regional seat is a positive sign.
It all points towards a further separation between Cathay longhaul and Dragon regional. 32 new narrowbodies to replace 'up to' 23 A320s of which some are almost new. I think its almost inevitable KA will take over most of the CX regional network, leaving them to focus on long haul and trunk routes. It would be a welcome development imo.