:) I feel like this the same sort of thinking as tech debt. Names? Who cares! Everyone knows what the situation is on the ground.
In my view, norms have to be actively upheld, even especially if you are on "Team 'rule of law'". If the thing is a state, call it a state dammit! I like this argument because it doesn't rely on "well, you gotta foresee China becoming strong and stuff". No, you don't, just have a principle that de jure and de facto should deviate as little as possible.
I stand by my original analysis that doesn't matter what the KMT thinks, because RoC effectively a client state of the US at the time, with no TSMC to get more leverage, and also that the PRC should be happy enough to get its UN seat. If we wanted to, we could have made this happen, but we are sloppy and we didn't try.