This absolutely should not be normalized. If I'm ever prompted to submit photos of a government ID to some service, I'm turning heel. I'll try to use their phone service (which I just did successfully this week), correspond via mail or maybe, as you've said, handle it in person but I'm probably content to go without.
My driver's license is scanned every time I buy beer. I'm under no illusions that it's not quite readily available in any number of leaks or disclosures.
If that sounds defeatist, maybe it is. Nothing online is private. Once it's in a database, it's only a matter of time before it's exposed. History has proven this again and again.
It wasn't "normies" so much as it was the leadership and early investors of Facebook shoving "just trust us" and FOMO literally everywhere online. The hype (and hope) in 2010 was REAL and almost all privacy related conversations were shut down on sight. Heck, I think I still have my copy of Jeff Jarvis's Public Parts (ISBN13 9781451636352) somewhere in my closet. Amazing read if you really want to understand the mindset in place at the time.