I sat for the UK GCE A level in HK and used that result to apply for oversea university decades ago. I did not use my HK A level result at all. Issues solved. Piece of cake.
Assuming all your analyses are correct, the 79 universities are simply inflicting losses on themselves in that they are turning away brilliant students from HK. These students still have lots of other options, including world-renowned universities like Beijing and Qinghua.
No big wok at all, don't exaggerate thing, the whole world teaches the same thing , don't have to go oversea to study , stay in the city colleges if you can't immigrate,