I agree with you. It's very difficult to take a position if we were witnesses.

leaving the funds frozen is logistically identical to sending it to @null

No. Steemit Inc can use that accounts to delegate, create accounts, posts, and comments. That is to say, they are enabled to use those funds in the same way as they were previously (supporting new projects with delegations and creating new accounts) with the exception of transfer, power down, and votes to witnesses and proposals.
A hardfork is perfectly possible.