I lose too much obsidian to lava.
I would like to see this feature implemented as it's hard to find a place to PvP without going through the hassle of turning it on and back off again. As long as everyone follows the rules that would be in place for this I don't see a problem.
There are texture packs for x-raying in 1.14.
A quick search on youtube turns up a handful of videos a month old or less that have downloads for them. Not saying that you were x-raying, but just letting you know it's possible. If you look at the ban list you're not even the only person who has been banned for x-raying.
I believe that Tarlin's main reasoning for switching the server to hard mode is spawn rates will be increased, thus making mob grinders more useful which are a very prominent part of towny.
Dolphins and fish are currently turned off to deal with lag, putting the server into hard mode to spawn more mobs would be contrary. Also there is an entity limit set. Multiplayer Minecraft hasn't exactly been a smooth operation since the Aquatic Update.