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Am I being cynical in thinking that this is to help remove the 'bottleneck' that the SRA's super-exam will engender?

A law student can now paralegal for a couple of years (usually doing the same mindless rote tasks throughout), fail to get a training contract offer, pass the 'super' exam (which will no doubt be online, multi-choice, and have 90%+ pass rate), call himself or herself a 'solcitor' and then practice as a 'freelancer' offering services directly to an unsuspecting public under the 'solicitor' brand. Excellent protection for the 'consumer'!

As for:
'The SRA says the current rule about setting up a firm is confusing, conflating technical competence, supervision arrangements and running a business.'

This says it all. These ARE the critical three things required to properly set up and run a law firm. They SHOULD be conflated by any competent regulator.