Yes, removing bots would harm the battle liquidity (like in modern, when the split happened) and likewise the rental market will suffer as well.
That's a no brainer.
Tbh I think NFTyArcade is the best product to tackle the profit of asset holders in such a case, combined with a much better onboarding procedure in place.
The worst experience for players starting with no clue of the game mechanics is getting owned by some creepy bots even in novice all day long, which operate on their databases.
Always loosing won't get you to swollow the splinterlands pill!
As you said:
"on top of the fact that town halls mentioned botting was legal on several occasions and it wouldn't change in the future."
I would answer with a quote from @yabapmatt:
"Initial plans are never perfect and it's important to be able to make changes to the initial plan later on."
that they damage the rental market is but only the first look. because the whole look is. they take it away from us from the reward pool and give us a small part of it back via the rental market ;)
and what's worse, it's not even given back fairly. they take it away from the lower reward pools and through the rental market they give it back to the people from upper leagues for the most part. so in addition it's a redistribution from the bottom to the top