Now of course this might be a totally acceptable price to pay, I'm not necessarily arguing against it. It will just be conveniently omitted from public communications on the topic by the EU. For regulators, there never are tradeoffs, after all.
Supply control usually benefits the producers, despite what it may seem (destroying items). Increasing the supply lowers the relative pricing power of the vendors, and reduces the price an average consumer pays for the same item, even if the retail price for the item technically increases.
I'd say it is good in the long run. If people spent less on clothes, they'd have more to spend on other goods and services or invest in productive endeavors.
And for non-luxury brands this law will simply increase costs for companies operating in the EU and therefore cause people to spend more on clothes.
If that can be avoided somehow (I haven't looked in detail at the legal text) I think the outcome you mention would be good. Slower fashion cycles, higher quality and higher cost per item would all potentially synergise. Another thing that could happen is less overproduction, which would also be good.
Thinking about what else could be done: I would like to see some mandatory marking indicating fiber / weaving quality. I have had T-shirts that lasted a decade, and those that lasted a couple of years. And it is very hard to tell up front which is which. As a consumer I would like to be able to tell.