I've not seen any arguments about why a motor over 250W 'isnt needed
Let me try for you. I believe that you have a misunderstanding about the law.
The law says that a motor must be "RATED" at no more than 250w. There is effectively no rule for how the rating should be done, so a manufacturer can rate any high powered motor at 250w if they want.
Many manuafacturers are now aware of that so they're now producing bikes that can produce a lot of power, and in many cases more power than what people used to class as 500w, 750w or 1000w. Typically for hub-motors, those higher rated motors can produce that power because they're allowed to run at much higher speeds, whichyou can't use because you're limited to 15.5 mph. Let's say that the a motor can output 1000w at 30 mph with a 25 amp controller at 48v. When it's restricted to 15.5 mph, it would only be able to produce about 600w.
If you go back in time, you will see that 250w motors were running at 15.5 mph and providing about 20NM of torque for a hub-motor and 40NM for a crank-drive, but the crank-drive can only make that torque at very low speed.
Power = torque x speed. Without going into units, that would be 20 x 15.5 and 40 x 7.75
Today, you will see 250w motors listed that make 90NM of torque and still 15.5 mph, so the power from a hub-motor would be 90 x 15.5 and 90 x 7.75 for the crank-motor. That's 4 1/2 times the power for some of today's hub-motors compared with ten years ago, yet they're both 250w motors and both legal.
Ask yourself how can a 250w Bosch motor make nearly three times as much power as it used to, but still be 250w?
In the case of the 250w Heinzmann Cargo bike motors, they can drag 500kg up a 14% incline. There is nobody that would need more power than that for their ebike. In other words, nobody needs to complain about power limits because effectively there are none.
If anybody really wants a throttle as well, they can get one as long as they get the SVA test done, which is not difficult, so the law gives you everything you need right now. That's probably why they dropped the idea to make changes, plus, they didn't want hoards of teenagers marauding the neighbourhoods on 500w e-scooters.