Let's answer your question with a question...

What would be Blackrocks motivation for putting billions of their clients capital at risk with this evil plot?

Besides the obvious "the gov makes them do it" which is a possibility, there doesn't seem to be a logical reason for them to do this. It'd be risky (as it might fail) and even if it doesn't, how would holding KYCBTC be any more profitable for them than the BTC they already hold? Even if it works perfectly and all their BTC == all their new KYCBTC there's still the huge cost of enacting the plan.

Also you said yourself they "sell all their billions in coins in the legacy non-kyc chain", wouldn't that be selling into a huge bear market losing them billions? Why would they do that? Even if their evil plan works perfectly and BTC becomes 100% KYCBTC... how does that make them more money? Pretty sure that's all they really care about.

This we think is one of the best aspects of Bitcoin, it's absolutely freedom tech and has amazingly fair and honest aspects to it (you shall not counterfeit, you shall not inflate, you shall not double spend etc) but all that honesty is brutally enforced by game theory and the greed of the masses. It's pure genius.