1. While each home directory is individually encrypted, since /home itself is not encrypted (unlike with current uses of full disk encryption), the user login names can be found unencrypted on the disk.
2. Since each home directory is individually encrypted, backup systems like borgbackup running as root can no longer easily backup everything.
3. As far as I could understand, this proposal does not have a mechanism to share disk space between the system and the user directories. This goes in the opposite direction of for example https://fedoraproject.org/wiki/Changes/BtrfsByDefault in Fedora 33, which allowed the whole disk to be used for files in /home, instead of always reserving IIRC 50 gigabytes exclusively for files outside /home.