One might argue that any harm done here is outweighed by the fact that the target of the harassment won't be able to see any of it, and I find that argument reasonably persuasive. It seems that Twitter's decision has been taken in order to make blocking a 'silent' or 'invisible' action, such that the person being blocked cannot know that they're blocked. Their calculation seems to be that harm is reduced this way, because it introduces an asymmetry of information in favour of the person doing the blocking - they know who they have blocked, but the person they've blocked does not. To call that 'capitulation' is not an accurate reading of the situation, in my view.
(edit: I want to stress that I'm not saying it's wrong, just that it seems rather counter-intuitive.)
Personally, I liked the change; I'd like to be able to block annoying people who nevertheless RT my stuff.