We need to wait to see confirmation of the decision first. I'd agree with you that I don't believe FFP will be scrapped, certainly not in the short term, as the ego's and arrogance of UEFA will prevent them from doing such.
However, the system will be rendered impotent if this goes through. Every club will know, if they are fined with a breach in relation to sponsorship, they would now only need to vaguely threaten them with escalating it to CAS and unless UEFA would be in a position to show a more clear breach of the regulations than City partook in (including seemingly quite blatant disregard for the rules). To overturn a precedent it normally has to be substantially beyond what a court finds. Given the levels of breaches City partook in, I'm not even sure how that would look.
The sponsorship deal that they organised I believe was something like 15 x higher than the most lucrative deal at the time. Thats the scale we are talking here. Imagine the biggest sponsorship deal for something in the league, stick a 0 on the end of it, and as a club we still wouldn't even be approaching what City did. That looks like to be cleared by CAS. What does something substantially worse look like? 100 times bigger than the biggest deal? ON Shirt sponsorship that would be a deal of £8bn per season, which we would in no way require.
So maybe they keep running FFP for a time, but it is all a tad pointless if you can't impose sanctions. It just becomes a voluntary scheme that people can follow if they choose.