This would never land in a factory image or upstream Android, but it has a reasonable chance to become part of projects like LineageOS, given enough user demand for it.
Looks like Privacy Guard was dropped because the rewrite wasn't worth the effort.
Sometimes I can't comprehend how people come up with that stuff when it was already publicly explained how/why it happened :/
Edit: source here https://news.ycombinator.com/item?id=28096873
Privacy Guard also wasn't as complete as XPrivacy (and its evolutions) were. It's a shame that the feature disappeared, but I don't think it mattered much to begin with.
I myself removed that feature because the effort to have it was more of an hassle than anything else.