Since the vast majority of transactions will be <42.94967295 BTC, almost all transactions will have exponent zero. So, transactions with exponent >0 will stand out and be much less anonymous. And the inputs and outputs to coinjoins will need to have the same exponent.
Nothing against it, the space saved is worth the loss of anonymity for very large transactions. But it is probably best to warn people about it so that no one uses confidential transactions incorrectly.
Also, if I have several inputs with different exponents (let's say 0,1 and 2) and I want join them into a single ouput, will the protocol force me to have two outputs (with exp 0 and 2) or will it round down the amount?
Inputs do not have an exponent. The exponent is a property of the range proof, not of the values themselves. They work by scaling the basis the proof operates over.
Right now elements alpha wallet only lets the exponent be changed by a config file setting.
Edit2: Speaking of which, is this going to make it to Bitcoin core or is this expected to remain on a sidechain?
This exactly? No-- but some optimized, mature, and superior version... sometime in the future? I certainly plan to work towards that end. There are other people who work on software in this space which wouldn't support it, however.
Aside, as TierNolan pointed out-- this composes perfectly with coinjoin and coinswap, and the interface is setup to facilitate coinjoin already; in coinjoin the participants need not learn each others values. And in the case of coinswaps the swap transactions can be made indistinguishable from ordinary payments to a single key due to the switch to schnorr signatures.