I have a problem with the fact that they found a loophole in code and use it to embed the data, create the false sense of non-fungibility and scam thousands or probably millions of people.
I don't have a problem with the "loophole", because I know they can re-create another protocol after the loophole is fixed. For example, store their Ordinals in the UTXO set, which would be even worse for us then. It's like beating the air. As for the scam part, I am not the sole arbitrator of truth. If some people find it funny, entertaining etc., I have no right to trespass their freedom. I can warn them, but that's the most I can do, and so should everyone else.
If you don't have the freedom to make mistakes, then what kind of freedom do you have?
I do not wish to censor transactions, I wish to censor abuse.
I mean, let's leave asides principles for a moment. How are you thinking of doing this? Suppose that I'm a miner. Please convince me that I should censor Ordinals.
What I wrote below, is completely my honest opinion.
Here's mine.
Bitcoin is a hell of a lot things. It's peer-to-peer cash, it's a decentralized computer network, it's a living organism, it's sound money, it's digital scarcity, it's an idea, but more importantly: it's money separated from the state. It's not prone to human corruption. Please take a moment to comprehend the significance of this property.
Trade is what keeps us civilized. Because I can trade with you for what you have, I don't have to kill you for what you have. To facilitate trade, we need money. Therefore, money is extremely important for the human species. However, all the money we've had so far has been prone to corruption, often controlled by an entity, a government, or the elite. This control allows them to manipulate money for their own benefit, which takes us back to primitive times. When money is corrupted, the free market becomes corrupted as well. Trade is then based on false positives, and the signal of prices becomes distorted.
You might have heard of Bitcoin being peaceful revolution, or freedom money.
That is what it fixes. And it'd be unforgivable if we started experimenting with that property. If you simply want to experiment with a new payment system, there are altcoins for that.
Good point. Miners could indeed add full movies to blocks. But that can be fixed in a consensus rule: the moment we increase the block size, we set a minimum fee of 1 sat/byte for all transactions. If it's less, other miners will reject the block.
I now see that you don't just want to increase the block size. You want to change more than that.

That doesn't change the situation. We could argue that it'd discourage ordinary users, but it doesn't discourage miners since that 1 sat/vb goes back to them. Ordinary users could still come to an agreement with the mining pool.