Google has been tightening its grip on Android ever since Andy Rubin (its creator) was shown the door (for alleged breach of contract) in 2014, with some engineers quitting after him, and others openly questioning Google’s motives at their own flagship developer conference, “Google I/O”. The latest worry about AOSP is just another installment in the shit show that’s been going on for years and trending in the wrong direction.
See this from 2018 (!): Google’s iron grip on Android: Controlling open source by any means necessary | Ars Technica (mirror).
While I don’t believe Play Integrity would spell the end of custom ROMs, it is indeed making it harder for regular users to rely on them over OEM (stock) OS. This may end up pushing ROM projects into hardware partnerships and become OEM themselves, which might be a good thing in the long term for the ROM developers, but not all ROM projects would be comfortable doing so (especially, the ones focused on “de-Googling”).
All in all, a very predictable move by Google, but if past is any indicator, you can bet your house on them to squeeze us all (in the mod community) even more.
This isn’t the end, but the writing is on the wall.