Manufacturers are happy to sell crate motors just to pick up a little extra revenue but it will never be more than a tiny niche market for enthusiasts.
Considering that the venn diagram between "people who profess to care a lot about safety" and "people who profess to care a lot about the environment" has a pretty massive overlap I look forward to the inevitable dumpster fire as people are forced to reconcile that the tradeoffs exist.
Furthermore, a ton of ancillary stuff has improved so much over the last 20+yr that the cumulative difference is quite noticeable. Few people will drop "new Mitsubishi Mirage" money re-powering an '03 Civic.
as you hint at re. legislation this is heavily dependant on how any transition is structured - a heavy-handed transition would put alot of upward market pressure on new EV's and downward pressure on old ICV's that could create a market niche for conversions - they might not spend "new Mitsubishi Mirage" money on a civic, but they might opt to save 5-10k vs new/slightly used EV for a '15 converted mercedes ...