The problem isn't a limit in general but that 1MB is so low that under any meaningful adoption scenario it will push all individual users off the blockchain to rely on trusted third parties.
This statement is just *wrong* (and is itself a straw-man argument).
With other blockchains that also work trustlessly why on earth is anyone being pushed to rely on trusted 3rd parties?
Of course they are not (OP should fix that IMO).
You're not just limiting the amount of transactions per block, you're limiting the development of potential services of tomorrow.