Basically I think this will really work well for most kind of Elite players. Someone who was looking for more depth of world and events can now watch the various powers plays on each other and plan their allegiances accordingly. They could get deep into that level of interaction, if they want.
While this won't give EVE players what they might have wanted, it will give some of the veneer of scope which should hopefully satisfy them. Are they player led factions? No, but how many players actually lead factions versus following them anyway?
And for the old school players like myself, I can continue playing as I have before with no real changes - except that those galactic events are going to have an impact on where I go and what I do. Suddenly it's worth reading GalNet News for more than just story reasons. I might want to avoid certain areas or jump in to try and find an opportunity.
And maybe, just maybe, there will be a faction I feel I can get on board with and feel invested about helping them succeed. If not, no worries, I'm used to being in it for myself.
All in all I can see this playing out very well, without changing the core of what Elite is whatsoever.
(and now back to my live feed

I wouldn't read too much into how much power a single individual will wield in 1.3. It will give the world a more concrete sense of conflict and politics and ramifications, and allow players to influence it, but I doubt you'll see huge swings in the galaxy overnight or even every week. It would probably take months to wipe out a faction from existence, for example, and that would be with constant losses.
Honestly, I don't think this will hurt old-school Elite players in any way, and might just give them a little something extra to worth with if they so choose.