Honestly, I'm a bit more confused now. I definitely agree that humans have a tendency to dehumanize others, but I wouldn't consider this a good or healthy thing that we should just accept. So having a ruleset that says, canonically, "this group of sentient creatures is inherently evil" and not "this group of sentient creatures is believed to be evil by this other group" you are encouraging the players to take an unnuanced view of the world.

However, as a gamemaster you have to allow your players to make two choices:

1. Are the monsters we are fighting people or not?

2. Does my character agree with me?

Isn't this what the lore changes encourage, by not making a factual statement about the groups, so the players should ask themselves this question on a case-by-case basis and not simply based on what type of creature they are? And I'm not sure how the changes would prevent the narrative approach you describe. Saying that goblins and orcs live in human-like societies doesn't prevent you from telling a story that's analogous to what has happened between human societies.

Maybe we're working off of different data points, what WotC material are specifically referring to for the changes?

...are you calling first person shooters "shmups"?