I disagree with your 2nd point. This seems like over generalizing. You're saying that every Airbnb host that is upset about this change is suddenly using Airbnb illegally? Definitely not true.
It sounds like the verification flow has some serious design/flow problems. If I'm an Airbnb host in a major city and I have an affordable and highly rated place, I'm likely to attract all kinds of guests: both sophisticated and unsophisticated. For example, the most frequented place on Airbnb in San Francisco has probably seen hundreds of guests from around the world:
https://www.airbnb.com/rooms/33577
Different people are different. Not everyone actually has a government issued ID. This does not mean they are necessarily illegal or untrustworthy. I think many people are going to freak out about these requirements... not just people without IDs, but average people who find the process intrusive. Do I have to answer security questions and upload my ID when booking a hotel? No.
However, maybe Airbnb has already tested this on a smaller random set of their listings and proven it doesn't reduce bookings.