Hey thanks for having a look!
For existing wallets, there’s no incentive to upgrade to P2SH32 - they don’t have to do anything about this CHIP, they can safely ignore it. Existing P2SH is used mostly for multisig and it’s established itself pretty well, and for multisig it’s possible to work around the collision problem and continue benefiting from privacy pool and smaller UTXOs.
Yeah, I expect first P2SH32 addresses to be those of public-facing contracts. So you’ll be sending to those by either your wallet enabling sending directly, or there will be a web app that runs a temporary wallet in your browser and you send to its normal P2PKH and the web app forwards it to the P2SH32 contract, similar to how AnyHedge works. In either case, your wallet would be returning the change to normal P2PKH UTXOs (or P2SH in case of multisig wallets) - even when sending to some new app that requires payment to P2SH32 address.
You can’t really prevent it - but it would be a conscious effort to make P2SH32 the change address type, and many wallets are not multisig but pure P2PKH (even though they know how to send to P2SH when shown such an address belonging to some other wallet, but they’ll return the change to P2PKH). For existing users there’s no benefit/incentive to going with P2SH32 because it costs manhours to implement it + sending to P2SH32 addresses is more expensive.
What I’m saying here - doing nothing is the path of least resistance, and we can expect most to do safely do the nothing
Sure I’ll see how I can improve on that, although I hope that it’s already clear that other than upgrading the node as part of orderly HF upgrade - nobody has to do a thing about this CHIP. It solves only the particular collision problem which was not even the main objective of SegWit (but was a well known problem, which is why SegWit shipped with both 20b and 32b addresses and not just the 20b). The collision problem part has nothing to do with the main objectives of segwit: malleability and blocksize, and there’s no benefit like reduced fees to be reaped by wallets here. And P2SH32 solves the collision problem in a different way than SegWit: there will be no 3rd VM run, but anyway the inner workings are not really relevant for privacy consideration, just for info.