It seems that the best example of only-on-terrain with a non-decorative object remains the Amiga version of Fun 20/Mayhem 7, unfortunately I've yet to find a youtube video that actually shows it. And to be fair, I feel even there it sounds better on paper than it actually looks. Note that AFAIK that use of the acid objects in those levels are still deadly (at the very least, it doesn't affect level solutions to have them be deadly). It is also placed away from any solution paths.
It remains the case that only-on-terrain will likely be a niche feature even for artistic purposes, not completely useless but certainly rarely needed. Given its relative low usage, I guess if the few level authors who are affected can all find acceptable alternatives, then it's hard to argue for keeping it. We are still sort of punishing those level authors for their past artistic creativity but I'll take their acceptance of an alternative decoration (or removal of decoration altogether) as them getting over the loss.
One can argue we are still stifling future artistic creativity, but given that this particular option hasn't given rise to much artistic effects thus far, it seems their artistic energy is probably better spent on other more flexible avenues like creating or updating/supplementing the graphics sets with new decorative options.
Agree how our result won't affect the L2 Shadow set. Yet L2 Shadow highlights the problems from no-effect.
I suppose you can phrase it that particular way. Yet if we look at the problematic decorative objects in L2 shadow:
a) If we turn them into deadly (or otherwise some sort of effect) objects but leave them unanimated by default, they still don't stand out visually from terrain. The best that can be said is that maybe you'll remember them better for future due to the negative reinforcement after sending a lemming to it.
b) If we leave them decorative but have them animated by default, this is enough on its own to make them stand out and to let you know that they aren't terrain. It is true that you can't tell for sure they have no effect until you send a lemming to it and see what happens.
c) If we add an effect to them and have them animated by default, you are really still in case B, unless the game only offers one kind of effect. Otherwise, you still can't tell what the effect is (kill one? kill all? exit? spring? teleport?) without testing it with a lemming.
So I'm not really seeing a completely solved issue with any of the options above. If you only care about partially solving it, adding animation actually seems to be more helpful than giving an effect to the object.
[edit: if the objection is specifically about turning a functional object fake for decorative purposes, that point I can see more merit for, though that's not really the way I see L2's shadow set as problematic--the game is actually quite consistent in treating which pieces in the set are decorative vs terrain, just that visually you can't really tell which is which. Generally speaking, if a decoration is far away from the solution paths, you probably don't need to make it fake.]
Fake turns yes-effect into no-effect
Sure, but I imagine almost everyone will agree that if an option exists to change the effect of any object to anything, it'd be just as bad to turn an exit into a constant trap, or a teleport into a spring, etc. Because doing so purposely introduces a functional inconsistency--not specifically because of no-effect per se.
I don't put up decorations during the holidays.
That's fine and feel free to do so when you make graphics sets. I just expect that other people may want to create a graphics set like Holiday Lemmings with its purely decorative Christmas lights, and I don't feel particularly convinced at this point that I should be discouraging them.