But double that to 500W and you now have an invisible pro athlete powering your bike, giving you enormous acceleration. And you have untrained untested people using these on cycleways and shared use paths. What could possibly go wrong?
Now double that again to 1000W. You're riding round on a tandem powered by Wout van Aert and Mathieu van Der Poel. This is motorbike level power. And motorbikes haven't revolutionised transport, slashing vehicle numbers. If you want electric motorbikes, sure, but they are still motorbikes.
* Coincidentally, 250W happens to be my FTP. Actually it's not a coincidence. I don't mean that they used me as a basis for the rules, just that I'm fairly ordinary and they used a ballpark figure for what ordinary people can do - so that the bike performs and handles similarly to an ordinary person-powered bike but is accessible to more people.
I'm not sure how many e-bikes you've ridden in the real world but your theoretical stats don't match up to reality.
"Enormous acceleration" is risible. On the flat with a lightish rider it can be reasonably brisk but add a weighty rider and a steep incline and that soon finds its limits. "1000W is motorbike level power"

It's a fraction of the 11kw for a restricted 125cc machine, so let's get some perspective please.
I have an Orbea Gain e-road bike with 250w and I love it. It's a lightweight e-bike with a small battery, about 14 kg in all and it's very easy to pedal with the motor off. I'm 90 ish kg and reasonably fit for an average person (not very fit compared to keen cyclists, but I don't really do the miles) but even on full assist it will only get me up 15%-20% hills if I put in a lot of effort myself.
I've also got a Cube e-MTB with a Bosch motor and that is a different beast. The bike is 25kg. The motor is legal as it's is rated for 250w continuous but it can deliver something like 3 times that for short bursts. The acceleration is quite fun and grin inducing but it's nowhere near motorbike level. Yes of course it could take the unwary by surprise and you do have to be careful with your weight distribution on steep climbs but that's the case for normal bikes too.
My gut feeling is to enable more people, especially heavier people or less physically able, e.g with hip and knee conditions, in hilly areas to commute for further distances and give up car use; about 500w but with a 20mph assist cutoff (or 30km/h - 18.6mph) would be about right.
As to untrained, untested people using them on shared use paths, well you have that now. Worse in fact because the situation is so little enforced that it seems people have the attitude of anything goes. They're so unlikely to be caught.
Currently, people are motivated to cross the line, e.g by dongles to defeat the assist speed. Once they've done that there's no incentive not to go for the maximum the bike will do.
Less tight limits with tighter enforcement is the way forwards IMHO. If the law allows realistic use by more people, they're less likely to seek to cross the line.