The GOP is prioritizing § 230 reform. Given their likely fall from power and prioritization of the SCOTUS confirmation, as well as Democrat control of the House and its focus on stimulus bills, the short-term threat is minute.
From an amoral government relations perspective, heavier moderation makes sense. A Biden spoof going viral during the election would attract the attention of incoming Democrat legislators. That creates a medium-term threat where there isn't one.
That said, I'm surprised they chose to block the content over de-prioritise it algorithmically and flag it with a warning.