Most people seem to be saying that it will be a simple software update to fix this issue, and everything will be fine other than some loss of power and fuel economy.

Isn't it possible that running these engines at the EPA recommended levels just isn't possible? That if they were to run like this 100% of the time, reliability, mpg, or power would be greatly reduced for various reasons?

There is a reason they took this huge risk to put in the cheat (but maybe management didn't think it was a big deal). It seems like there is too much risk involved in cheating for just minor fuel economy and power gains.