Count me in as one of the DM that will soon be downgraded to GO, but ironically moving down one tier from DM to GO allows me to be 3U Platinum member AND MU Gold member. I would of never dream of this scenario.
Think about it. I was trying my best to remain DM last year, and I've decided the hell with it this year. This year I settled at 600 points earned, and moved my F/C business to 3U and MU, and I made Platinum and Gold respectively fairly easily. Now I have OWS, Skyteam Elite Plus, and 3U Platinum. The "sky has opened" brightly for me. If Cathay didn't castrate their MPO program I would of never guess my flying patterns allows me to do this (too lazy to do the math).
Anyway, as for losing revenue on lounges. I would imagine the "upset" redemption gang would still find Cathay G16 or any of the Cathay C lounges way superior over against their own airline's lounges. I would not imagine a mass exodus of loss lounge revenue if Cathay does have the guts to limit Wing/Pier F.
So Cathay decided to be as nice as possible to non-Cathay members in fear of "upsetting" them, and somehow Cathay has no problem upsetting their long-time loyal F/C/premium-Y flyers and watch the real exodus?