Exactly, it was meant to reduce utxo set bloat by making utxo consolidation cheaper. But I think we can all agree at this point, it has had the complete opposite effect in practice. The net result has been more utxo bloat due to all the jpeg spam.

If blocks were still 1mb (i.e. no witness discount), and the jpegers were paying 4x the cost to fairly compete with monetary transactions, I think a lot of the spam never would have happened.